Market Flash: iSHARES MSCI Indonesia Investable Market Index Fund (EIDO:US) PRICE: 28.530 USD Down -0.360 (-1.246%) >>> BI: Rupiah Melemah Akibat Kondisi Eropa >>> Pertemuan FED pertimbangkan langkah baru dorong ekonomi >>> KIJA akan Terbitkan MEN Valas USD150 Juta >>> PT Indika Energy Perusahaan Teladan Dunia 2011 >>> Govt Promises Revision of Cost Recovery Regulation >>> BPMigas Demands PGN to Pay US$6 per MMBTU >>> Jababeka to Raise US$150 Million from Debt Markets >>> SCG Chemicals buys Chandra Asri >>> Solusi Tunas eyes Rp380 bio IPO >>> SMR Utama scouts Rp300 bio IPO >>> Alam Sutera picks two bond arrangers >>> ASII Tetap Rajai Penjualan Mobil Agustus 2011 >>> Perusahaan Thailand kuasai Saham TPIA senilai Rp 3,76 Triliun >>> Agis Main ke Tambang, Sahamnya Masuk Dalam Pengawasan >>> ACES Mendekati The Northern Agar Mau Kurangi Kepemilikan >>> IHSG masih harus berjuang terus bertahan diatas MA200 >>> Melirik Peluang Akumulasi di Saham Perbankan >>> Analisa Saham BUMI: Kuat Bertahan & Berpeluang Kembali Uptrend >>> Analisa Saham JSMR: Bertahan Di Support, What Next? >>> INDF Tertahan Di Area Support Kuat, Berpeluang Rebound >>> ASII Break Minor Support, Sell on Strength >>> ADRO Membentuk Descending Wedges, Berpeluang Rebound Terbatas >>> Wall Street ends flat as early gains evaporate >>> Fed begins policy meeting, tiptoes toward easing >>> Fed meeting to help decide on long-term Treasuries >>> Greece Makes 'Good Progress' in Reform Talks: EC >>> China worried Europe debt crisis will hit trade >>> China could roll out 4.65tr yuan stimulus package >>> IMF sees Mideast stagnation >>> NYMEX-Crude ends higher at Oct contract expiry >>> Asian Crude Palm Oil Up On Technical Buying, Soyoil >>> Foreign net Sell - 61.785.746

Kamis, 10 April 2014

Widodo Indonesia Presidency Path Complicated After Vote

Widodo Indonesia Presidency Path Complicated After Vote

By Neil Chatterjee and Berni Moestafa Apr 10, 2014 12:50 AM GMT+0700

Indonesian presidential frontrunner Joko Widodo may need to form a coalition to get elected after his party appeared to capture an unexpectedly slim lead in parliamentary voting.
Widodo’s Indonesian Democratic Party of Struggle, or PDI-P, took 19.7 percent of the votes in the nation’s parliamentary elections yesterday, based on an unofficial tally by Lingkaran Survei Indonesia. That was about half the level projected in a March poll. Formal results won’t be declared until May 9.
Because of Indonesian election laws, Widodo, 52, now may have to form an alliance in order to stand in July’s presidential election. That would limit his ability to carry out reforms in Southeast Asia’s largest economy, expectations of which have helped push up the Jakarta stock market 17 percent in the last three months.
“Instead of a small, effective coalition centered on a strong PDI-P, he now faces the prospect of a fragmented, multi-party coalition,” Marcus Mietzner, an associate professor at the Australian National University in Canberra, said by e-mail.
The biggest Indonesia exchange-traded fund fell 3.5 percent yesterday and rupiah forwards dropped 0.5 percent as the estimates by polling companies showed the PDI-P got less of the vote than investors had anticipated. Jakarta stocks have jumped this year on expectations Widodo will win in July and boost investment in the economy.

Golkar, Gerindra

“The dynamics of the presidential race itself remain unchanged,” Mietzner said. Exit polls taken during yesterday’s parliamentary voting “demonstrated that Jokowi would have won the elections with a large margin,” Mietzner said, referring to Widodo by his nickname.
A Roy Morgan poll in March had Widodo as the preferred presidential choice of 45 percent of voters, 30 percentage points ahead of his closest contender, former general Prabowo Subianto.
Among other parties in the parliamentary elections, Golkar, the party of tycoon Aburizal Bakrie, 67, had 14.6 percent of the vote and Gerindra, whose candidate for president is Subianto, 62, had 11.9 percent, according to LSI. The Democratic Party of outgoing President Susilo Bambang Yudhoyono stood at 9.7 percent, it said. LSI had monitors at polling stations during the vote count.
PDI-P collected 19 percent of the vote, ahead of Golkar with 14.8 percent, according to polling company Saiful Mujani Research & Consulting, based on results from voting booths in its survey. Other post-election surveys echoed that outcome.


Widodo indicated late yesterday that he may have to align with other parties in order to be able to stand for president in the world’s third-largest democracy.
“We don’t want to talk about coalitions, we want to talk about cooperation to resolve the big problems of this big nation,” Widodo said on Metro TV. He was then joined in a panel by former vice-president Jusuf Kalla of Golkar, State-Owned Enterprises Minister Dahlan Iskan, of the Democratic Party, and Jakarta Deputy Governor Basuki Purnama, of Gerindra.
The result shows an absence of the “Jokowi effect” that may have come because PDI-P didn’t do a good enough job of associating him with the party, said Paul Rowland, a political analyst based in Jakarta who was formerly Indonesia country director for the National Democratic Institute, a non-government advocacy group.
Under Indonesian election rules there are two ways for a party to run a presidential candidate by itself. It needs to capture 25 percent of the popular vote in the parliamentary elections, or it needs to win 20 percent of the 560 parliamentary seats.
Two-Round Election?
“I think it would be a serious disappointment for them if they fall short of 20 percent of the seats in the house,” Rowland said. “It may mean that you have a two-round election instead of a single-round presidential election.”
President Yudhoyono, who is unable to stand again after two terms, governs with a coalition of five other parties.
Stocks (JCI) and the rupiah rallied after Widodo’s candidacy was announced last month, on optimism he would get things done on issues from infrastructure to tax collection, to bolster an economy that grew at the slowest pace in four years in 2013.
More than 185 million people were eligible to vote yesterday for the 12 parties contesting across the archipelago. It was the fourth election since the downfall of dictator Suharto in 1998.
The parliamentary make-up after the election will “still look rather ‘Balkanized’, increasing the chance that any coalition which comes into power may consist of an unwieldy group of parties, rather than just two or three with reasonably similar political platforms,” Wellian Wiranto, a Singapore-based economist at Oversea-Chinese Banking Corp., said in an e-mailed comment.
“One reason why the outgoing administration has had a rather lackluster term in office is due to the multi-party ‘Rainbow Coalition’ that it has had to maintain in the parliament, which proved to be a drag on the pace of economic reforms,” Wiranto said.
To contact the reporters on this story: Neil Chatterjee in Jakarta at; Berni Moestafa in Jakarta at
To contact the editors responsible for this story: Rosalind Mathieson at Dick Schumacher

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Selasa, 11 Maret 2014

Capital flows in Indonesia - Fragile no more

Capital flows in Indonesia -
Fragile no more
| How the world’s fourth-most-populous country is weathering the emerging-market turmoil.

(The Economist) - LAST year Indonesia was struck by the financial storm that pummelled emerging markets, earning itself a place among the so-called “fragile five” of the developing world. When in May the Federal Reserve began discussing plans to scale back its asset purchases, the prospect of higher yields in rich countries made investors reluctant to pour more money into emerging economies. Indonesia’s currency sank in value, along with those of other countries that had been prime destinations for rich-world cash.

This year other emerging markets suffered a similar slump, caused by the Fed’s decision to go ahead with the mooted “taper”. Central banks in Turkey, India and South Africa have all hiked interest rates to defend their battered currencies. Yet Indonesia’s rupiah has rallied by 3.3% against the dollar—the most among major emerging-market currencies. Jakarta’s main stockmarket is trading close to four-month highs. And foreign funds have bought $1 billion more local bonds and shares this year than they have sold.

Indonesia appears to owe its turnaround to timing. It earned its spot among the fragile five thanks to its large current-account deficit, which widened to a record $10 billion, or 4.4% of GDP, last summer. But in August its central bank abandoned efforts to prop up its currency and allowed it to float, leading to a depreciation of about 14% in real, trade-weighted terms from May to now. The weaker rupiah made Indonesia’s exports cheaper in foreign markets and imports more costly. The deficit has since dropped by more than half, to $4 billion, or 2% of GDP, at the end of 2013. In December Indonesia recorded its biggest monthly trade surplus for two years; merchandise exports rose by 10.3% year-on-year.

Other central banks waited too long to respond to market turmoil and then overreacted. Turkey raised rates by 5.5 percentage points in a single day, hoping to cow traders into laying down arms. Bank Indonesia had raised rates earlier, by contrast, and more gradually: enough to cool domestic demand but not enough to touch off a recession. The combination of higher rates and a cheaper currency nurtured a rebalancing. Despite slower consumption growth, annual GDP growth accelerated to 5.7% in the fourth quarter, boosted by exports. Indonesia NO LONGER looks so fragile.

Government policy may have helped the process along. The decision to raise the price of subsidised petrol and diesel squeezed demand for oil, which accounted for about 23% of imports at a cost of $42 billion last year. Other measures look less effective, like higher taxes on imports of some consumer and luxury goods. But the government, heady with recent success, now risks scaring away investors with heavier-handed intervention.

On February 11th Indonesia’s parliament passed a new trade law giving authorities far-reaching powers to restrict exports and imports. Its dubious aim is to protect local producers from foreign competition while developing higher-value industries. Bayu Krisnamurthi, the deputy trade minister, bragged that it showed that Indonesia was “not adopting a free market”. The law is only the latest in a series of ill-considered trade policies, which includes a recent ban on exports of mineral ores that puts at risk some $5 billion a year in foreign-exchange receipts.

The turn toward protectionism is linked to this year’s parliamentary and presidential elections—laissez-faire economics is unpopular in Indonesia. Yet with global capital in a fickle mood, governments cannot assume that markets will shrug off electioneering. Indonesia owes the striking turn of fortunes in its economic performance to rather orthodox economic policies. The central bank let market forces operate freely, allowing the rupiah to depreciate to the point where exports have become competitive again. If the authorities continue on their protectionist course they may convince investors that Indonesia remains fragile after all. And pushing the economy back into financial turmoil is unlikely to be a vote-winner.

Senin, 24 Februari 2014

The Boy is back? Risk of El Nino this year increases

Fri, Feb 21 04:55 AM EST
SINGAPORE (Reuters) - Global cocoa prices have rallied to 2-1/2-year highs on worries El Nino could return in 2014, while other agricultural commodity markets could also be hit by the specter of the weather anomaly.

El Nino - a warming of sea-surface temperatures in the Pacific - affects wind patterns and can trigger both floods and drought in different parts of the globe, curbing food supply.

The worst El Nino on record in 1997/98 was blamed for massive flooding along China's Yangtze river that killed more than 1,500 people.

El Nino means "boy" in Spanish and was first used by anchovy fishermen in Ecuador and Peru in the 19th century.

Below are some of the key commodities that could be affected by its return.


El Nino could bring dry weather to Australia, which is already struggling with a drought that has forced ranchers in the world's third-biggest beef exporter to cull cows, raising fears of a global beef shortage. El Nino could also curb wheat, sugar and cotton production in the country.

An El Nino episode usually results in below-average rainfall in main palm oil producers Indonesia and Malaysia, cutting yields and pushing up global prices.

It could also hurt crops in Thailand, one of the world's largest rice exporters, potentially worsening drought conditions usually seen in March-April.

El Nino would bring milder-than-normal temperatures to the major crop production areas of the U.S. Midwest. Iowa and Minnesota would benefit from the event's tendency for wetter-than-normal summers as the western Corn Belt continues to recover from a drought.

But excessive rains in the saturated soils of the eastern Corn Belt could be troublesome, particularly following this year's overly snowy winter. Drought-hit California, a major dairy and wine grape state, could see more rain than normal.

In China, El Nino could bring more rain to areas south of the Yellow River and cause flooding in the country's major rice and cotton growing regions.

Lower-than-normal temperatures could also occur in the country's top corn and soy areas in the northeast, leading to frost damage and lower grain output.

A strong El Nino in India would trigger lower production of summer crops such as rice, sugarcane and oilseeds. India is the world's No.2 producer of rice and wheat.

The Philippines' weather bureau already expects rainfall to be "way below" normal by April in most parts of the country, including rice-growing provinces in the Central Luzon region and sugar plantations in the Visayas provinces. El Nino could worsen that.

Previous El Nino episodes caused severe dry spells in the archipelago affecting vast tracts of farmland. A rice shortfall due to typhoons and drought connected to El Nino in 2010 prompted record imports of the national staple.


Global cocoa prices jumped to their strongest in more than two years in February on concerns a returning El Nino could cut output in main producers Ivory Coast, Ghana and Indonesia. The global market is expected to experience a second straight deficit in 2014.

Erratic weather could affect the development of coffee cherries and cocoa pods. In Indonesia, the world's third-largest cocoa producer, El Nino usually means extremely dry weather.

Indonesia's coffee output is forecast to fall to 9.5 million 60-kg bags in 2013/14 from 10.5 million in 2012/13 after dry weather at the start of the season reduced flowering and excessive rain during cherry development cut yields, according to the U.S. Department of Agriculture.

Indonesia competes in the robusta market with Vietnam, which would also suffer from an El Nino.

The Central Highlands region, which produces about 80 percent of Vietnam's coffee, has entered the dry season, and falling waters in rivers and streams coupled with strong wind would raise the risk of water shortages, according to the Science and Technology Department in the central highland province of Kontum.

El Nino usually brings warmer winters to Brazil, the world's top coffee producer, reducing the risk of coffee frost. But heavy rains would crimp production.

Drier weather could also help beat back moisture-loving roya or leaf rust fungus that is ravaging coffee plantations in Central America.

In 2009, El Nino turned Indian monsoon patchy, leading to the worst drought in nearly four decades which helped push global sugar prices to their highest in around 30 years.

(Reporting by Lewa Pardomuan in Singapore, Ho Binh Minh in Hanoi, Apornrath Phoonphongphiphat in Bangkok, Anuradha Raghu in Kuala Lumpur, Yayat Supriatna in Jakarta, Colin Packham in Sydney, Peter Murphy in Bogota, Dominique Patton and Niu Shuping in Beijing, Chris Prentice and Marcy Nicholson in New York, Erik Dela Cruz in Manila, Ratnajyoti Dutta in Delhi and Karl Plume in Chicago; Editing by Joseph Radford)
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Rabu, 19 Februari 2014

Rupiah’s World-Beating Rally Faces Trade Hurdle: Market Reversal

Feb. 18 (Bloomberg) -- Indonesia’s rupiah is set to snap its world-beating gains of the past week, trading patterns suggest, amid concern a clampdown on commodity exports will swing the nation’s trade balance back to the red.

The currency strengthened 3.3 percent in the five days through yesterday to 11,785 per dollar, sending a measure known as its 14-day relative-strength index to 24, the lowest since May 2011. Readings below 30 indicate a turnaround is likely. The rupiah also breached its Bollinger band as it climbed to a three-month high this week, adding to signs the rally may be overstretched.

December’s trade surplus was the biggest in more than two years and helped rein in a current-account deficit that spurred an exodus of funds from Indonesian assets in 2013, when the currency sank 21 percent. The nation banned shipments of unprocessed ore last month to encourage investment in smelters and refineries, a policy that Nomura Holdings Inc. and Bank of Tokyo-Mitsubishi UFJ Ltd. say led to front-loading of exports that distorted trade figures toward the end of last year.

“There’s very little room for the rupiah to gain because it has already strengthened so much,” Leong Sook Mei, the Southeast Asia head of global markets research at Bank of Tokyo-Mitsubishi in Singapore, said in an interview. “The quality of Indonesia’s current-account improvement remains suspect. And of course we still have electoral risk.”

A legislative election is scheduled for April and Indonesians will vote again in July to choose a successor to President Susilo Bambang Yudhoyono, who has led the country since 2004. Joko Widodo, the reform-minded Jakarta governor who is leading in opinion polls, has yet to secure his party’s nomination to run.

Asset Inflows

The rupiah rose as much as 1.4 percent to a three-month high of 11,658 yesterday, according to prices from local banks compiled by Bloomberg. The currency fell 0.5 percent to 11,844 per dollar in Jakarta today, while one-month non-deliverable forwards dropped 0.5 percent to 11,740.

Indonesia’s current-account deficit shrank to 1.98 percent of gross domestic product in the fourth quarter, from 3.8 percent in the previous period, the central bank said Feb. 13.

The gains in the Indonesian exchange rate in the five days through yesterday were the most among some 150 currencies tracked by Bloomberg. Overseas investors have pumped $1.2 billion into the country’s stocks and local-currency bonds this year on the improving economic data.

The country posted a $1.5-billion trade surplus for December on Feb. 3 as exports rose 10.3 percent from a year earlier, more than the median estimate in a Bloomberg survey, which saw a 1.7 percent increase.

Fair Value

Bank Indonesia raised its benchmark interest rate by 1.75 percentage points last year to slow the economy and rein in the current-account shortfall, which ballooned to a record 4.4 percent in the second quarter. The central bank said last week the deficit in the broadest measure of trade would probably be 2.5 percent this year, from 3.26 percent in 2013.

“Because of the front-loading of the ore exports, we don’t think the trade surplus will continue in the first quarter and beyond,” Enrico Tanuwidjaja, a Singapore-based economist at Nomura, said in a phone interview yesterday.

Goldman Sachs Group Inc. estimates “fair value” for the rupiah at around 11,800 per dollar, Singapore-based analyst Mark Tan wrote in a Feb. 12 note. The U.S. bank had forecast the currency to reach that level in 12 months.

A gauge of expected fluctuations in the rupiah is the highest among its Southeast Asian peers. Three-month implied volatility rose 10 basis points, or 0.1 percentage point, to 11.41 percent today. That compares with 7.23 percent for Malaysia’s ringgit and 6.6 percent for Thailand’s baht.

‘High’ Volatility

“Volatility in the rupiah could still be high in the first half,” Dian Ayu Yustina, a Jakarta-based economist at PT Bank Danamon, majority-owned by Singapore’s Temasek Holdings Pte, said in an interview yesterday. “We’re still cautious on the rupiah because the trade surplus could have been distorted.”

After the rupiah’s daily trading range breached the lower end of its Bollinger band in October and the relative-strength index fell past the 30 threshold, the rupiah weakened from that month’s high of 10,930 to a five-year low of 12,285 on Jan. 7.

Developed by John Bollinger in the 1980s, the bands are used by technical analysts to identify the turning point in an asset’s trajectory. The limits represent two standard deviations from the 20-day moving average, implying that the likelihood of a currency moving outside the band is small.

Commodity-Channel Index

The dollar’s 20-day period commodity channel index against the Southeast Asian currency dropped below minus 100 last week, suggesting the dollar was oversold, data compiled by Bloomberg show. The index was minus 126 today.

The rupiah may weaken to around 12,000 per dollar in the short term and trade in a range of 11,500 to 12,000 over the next three months or so, said Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co. in Tokyo.

“I wouldn’t be surprised if the rupiah sees some correction from quite a sharp rally,” he said in a phone interview from Tokyo. “It may be stabilizing overall, but there needs to be technical corrections from time to time.”

To contact the reporters on this story: Lilian Karunungan in Singapore at ; Yumi Teso in Bangkok at

To contact the editor responsible for this story: James Regan at
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Selasa, 21 Januari 2014

BRIC, MINT or CIVETS? Investors suffer acronym anxiety

Goldman Sachs bikin jagoan baru pengganti BRIC, yaitu MINT. Sementara HSBC punya jagoan sendiri, namanya CIVETS. Apapun namanya, baik MINT atau CIVETS, huruf "I" selalu akronim dari INDONESIA... Mantaaap...!!!

BRIC, MINT or CIVETS? Investors suffer acronym anxiety

Mon, Jan 20 09:06 AM EST
By Carolyn Cohn
LONDON (Reuters) - Which investment takes your fancy: BRIC, MINT or CIVETS? For many fund managers seeking the next big thing in emerging markets, the answer is none.

Acronym investment - putting money into small groupings of markets which often have little in common beyond a broad economic concept - is giving way to acronym anxiety.

Former Goldman Sachs economist Jim O'Neill set the ball rolling in 2001 when he created the BRIC family of Brazil, Russia, India and China.

Many of these countries and others lumped together under separate acronyms have, at least until recently, enjoyed turbo-charged economic growth. But investment gains are not guaranteed and underperforming local stock markets have led fund managers to flee what had been fashionable groupings.

Assets under management in BRIC funds fell to 9 billion euros at the end of last year from 21 billion at the end of 2010, according to Lipper data, while assets under management in broader emerging equity funds have grown in that time.

Goldman Sachs's own BRIC fund has lost 20 percent in value over the past three years.

Undaunted, O'Neill has coined a new acronym. In a series on BBC radio this month, he championed the MINT group - Mexico, Indonesia, Nigeria, Turkey - as the next giants after the BRICs. O'Neill stresses that MINT - like BRIC before - is an economic, not an investment, concept and his programs explored each country's problems as well as its potential.

Nevertheless, the appeal of acronym investment is fading. Fund managers say such groupings do not take into account different stages of development of the countries involved and risk sidelining other promising markets. The groupings have also frequently suffered from disappointing performances of their listed companies, the main target of foreign investors.

O'Neill's timing is not ideal. Turkey has been rocked by an investigation into alleged corruption following street protests last summer, while Nigerian politics are in turmoil before elections next year.

Indonesia, along with other emerging economies which are running large current account deficits, is experiencing a flight of investors.

"Mexico, Indonesia, Nigeria and Turkey are all very interesting countries but not much connected beyond the excuse for having an acronym," said Richard Titherington, chief investment officer of emerging equities at JP Morgan Asset Management. Titherington prefers groupings by concepts such as markets where companies offer the highest dividend yields.

Investors in the BRIC countries have already found out the hard way that economic growth may not convert into stock market gains, and some analysts blame problems with corporate governance in markets such as Russia and China.

BRIC markets have underperformed the broader MSCI index of emerging stocks in dollar terms in the past three years, with emerging markets in turn lagging developed markets.


In another sign of acronym anxiety, HSBC closed its CIVETS fund last year, leaving no managers tracking another group of emerging markets - Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa.

Both the BRIC and MINT groupings focus on demographics - countries which are going to grow rapidly by the middle of the century, due to their young populations.

This is an attraction of frontier economies - those which are at an earlier stage of development than established emerging markets. One such is Nigeria, whose stock market has been an extreme outperformer, doubling in value last year.

But relying exclusively on demographics to make investment decisions is risky, says Andrew Brudenell, frontier fund manager at HSBC Asset Management.

Instead, investors should look at countries with weaker corporate regulation and where relatively low levels of goods and services are available, offering potential for growth.

These factors should produce the best returns on company earnings. "Demographics are definitely one of the (investment) criteria, the others are also criteria," Brudenell said. "We would not necessarily decide MINT are interesting countries to invest in, there are lots of other ones."

Nigeria is at an earlier stage in the development cycle than the others. According to IMF estimates, its per capita gross domestic product (GDP) was about $2,800 last year measured by purchasing power parity. That compares with around $5,000 for Indonesia and more than $15,000 for Mexico and Turkey.

Turkey is the country most out of kilter in stock performance terms. It has been hit by weakness of its currency as foreign investors pulled out before the U.S. Federal Reserve begins scaling back its bond-buying this month, a program that had depressed yields in U.S. markets and encouraged investors to seek higher returns in riskier assets.

The Turkish stock market has underperformed even the BRICs in dollar terms in the last three years. The corruption inquiry, which led to the resignations of government ministers, aggravated the problem.

"Turkey remains a long-term investment opportunity but in the short term remains quite risky," said Mauro Ratto, head of emerging markets at Pioneer Investments.

As with Turkey, investors are wary of political risk in Nigeria before the next year's elections and amid uncertainty over whether President Goodluck Jonathan will run.

Whatever their differences or similarities, the danger with all emerging markets is that their performance is not always dictated by local stories, but by the global economic outlook.

"These countries do not have an independent monetary cycle," said Bill O'Neill, chief UK strategist at UBS Wealth Management. "In these environments, emerging markets do struggle short term."

Jim O'Neill said investors had got the wrong end of the stick by banking on the BRIC. "It is very important for me to emphasize, being Mr. BRIC, that I created the BRIC as an economic concept, not as an investment theme," he said.

The same went for the MINT grouping, said O'Neill. "Each of the four MINT (economies) make up more than 1 percent of the world's GDP, except Nigeria - which has the best potential to make up 1 percent of GDP," he added.

And as always, timing is vital with investing. While Goldman's BRIC fund has fallen in the past three years, it is up 26 percent since its launch almost eight years ago.

"If you invested in the BRICS in 2008 for the first time, you would not be very happy. If you had invested in them in 2000, you would be very happy," he said.

(Additional reporting by Sujata Rao; editing by David Stamp)

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Jumat, 10 Januari 2014

Property firms eye slow growth in ‘political year’

The Jakarta Post | Thu, 01/09/2014 | Business

Publicly listed property developers, PT Sentul City (BKSL) and PT Alam Sutera Realty (ASRI), are setting conservative growth targets in 2014 in anticipation of the “political year” when consumer spending is expected to fluctuate.

According to Sentul City vice president director Andrian Budi Utama, the company will pay close attention to consumer behavior in 2014 when the nation will hold a general election.

“We want to see how consumer spending fluctuates. We estimate that they will still be wise consumers, but we would like to be cautious nonetheless,” he said.

With the cautious approach, Sentul City has set a 20 percent growth target and expects to derive most of its revenues from its residential and commercial segments. By the end of 2014, the developer expects to book Rp 1.74 trillion (US$142.28 million) in total marketing sales and Rp 900 billion in revenues.

At the moment, the company runs an upscale housing and business complex in Sentul, Bogor, West Java province. The complex also consists of an apartment building and a theme park.

Despite its conservative target, Andrian said that Sentul City was looking to venture into new projects in 2014. They will include a five-star condominium hotel (condotel), a new apartment building and several cluster housing sites. The condotel will have 200 units and the apartment building will have around 600 units.

Meanwhile, the new housing clusters will bring the number new houses to 550 units in 2014. However, this year’s housing construction rate will be slower than it was in 2013, when the company managed to build around 478 new units, up 50 percent from 2012.

Sentul City has not released its 2013 full year financial results, but its latest report, dated September, shows that its sales and revenues rose by 12 percent to Rp 612.9 billion from a year ago.

Its bottom line surged more than four times to Rp 751.5 billion, thanks to investment earnings within an associated entity.

Separately, Alam Sutera corporate secretary Hendra Kurniawan said the firm’s business would likely be flat this year. “We will restrain ourselves from expanding aggressively and choose a wait-and-see approach just like we did during previous election years,” he said.

“We don’t really have any big projects in 2014. This year, we plan to focus more on developing the projects that we launched last year,” he added.

The projects launched last year include the construction of a central business district (CBD) complex on Jl. Gatot Subroto, South Jakarta, and an office tower in Tangerang, Banten province.

Meanwhile, as the company expects business to be flat, Alam Sutera’s marketing sales are predicted to hover around Rp 5 trillion, the same level it achieved in 2013.

Hendra said that two-thirds of the sales would come from its development areas in Serpong and Pasar Kemis, Tangerang, and one-third from projects scattered across other areas, such as Jakarta and Bali. Alam Sutera has set aside about Rp 1.5 trillion for its capital expenditure in 2014, some of which will be used to acquire new land.

Similar to Sentul City, Alam Sutera has not published its full-year report either. According to its January-September 2013 report, the firm posted Rp 3.04 trillion in sales, services and other revenues, a 77-percent rise from the same period in 2012. At the same time, its net profits climbed 16.7 percent to Rp 876.67 billion.

On Wednesday, Sentul City’s shares rose 1.3 percent to Rp 153 apiece from the previous day, while those of Alam Sutera increased 5.4 percent to Rp 448 per share.
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Selasa, 07 Januari 2014

Goldman to JPMorgan Say Sell Emerging Markets After Slide

Jan. 7 (Bloomberg) -- Wall Street’s biggest banks say the slump in emerging-market assets that left equities trailing advanced-nation shares by the most since 1998 last year will prove more than a fleeting selloff.

Goldman Sachs Group Inc. recommends investors cut allocations in developing nations by a third, forecasting “significant underperformance” for stocks, bonds and currencies over the next 10 years. JPMorgan Chase & Co. expects local-currency bonds to post 10 percent of their average returns since 2004 in the coming year, while Morgan Stanley projects the Brazilian real, Turkish lira and Russian ruble will extend declines after tumbling as much as 17 percent in 2013.

While the economies of Brazil, Russia, India and China symbolized the increasing power of the developing world during the worst of the global financial crisis and delivered outsized returns, Morgan Stanley says some of the same nations may now prove to be laggards as the U.S. Federal Reserve scales back unprecedented stimulus and interest rates rise. The MSCI Emerging Markets Index is down 3 percent this year, compared with a 1.2 percent drop in the developed-market index, and hit a four-month low yesterday as data from China showed weakness in manufacturing and services.

“The world not long ago was so mesmerized by the emerging markets without distinguishing the good from the bad,” Stephen Jen, a partner at SLJ Macro Partners LLP who correctly predicted the selloff in developing nations last year, said in a phone interview from London on Dec. 18. “The cost of capital will start to normalize and that’s when we see the truth being revealed in these markets.”

Bonds, Stocks

Emerging-market local-currency bonds returned 205 percent in dollar terms in the decade through 2012, compared with a 58 percent gain for U.S. Treasuries, according to data compiled by JPMorgan and Bank of America Corp. The MSCI Emerging Market Index of stocks advanced 261 percent, outpacing the 69 percent rally in the developed-market measure.

Last year, domestic bonds in developing nations lost 6.3 percent, the most since 2002 when JPMorgan started compiling the data. The MSCI emerging-market equity gauge fell 5 percent, compared with a 24 percent rally in MSCI’s World Index, the biggest underperformance in 15 years, according to data compiled by Bloomberg.

“It’s a structural de-rating that’s taking place” in emerging markets, John-Paul Smith, a Deutsche Bank AG strategist in London, said in a phone interview Dec. 18. Developing-nation stocks will trail their peers in advanced economies by a further 10 percent in 2014, he said.

China Lending

The recovery in developing economies, which contributed to 65 percent of the global expansion since 2010, is struggling to gather momentum as exports grow at the slowest pace in four years. China, which buys everything from Brazil’s iron ore and Chile’s copper, is facing the threat of bank failures as local government debt increased 20 percent annually since 2010.

While emerging markets are still expanding faster than developed countries, the margin will shrink this year to the smallest since 2002, according to Credit Suisse Group AG. The growth rate in advanced economies will almost double to 2.1 percent this year, while emerging markets expand 5.3 percent, compared with 4.7 percent in 2013.

Investors can still find value in developing nations as they differentiate economies based on growth momentum, inflation and balance of payments, according to Sara Zervos, who helps oversee $15 billion in assets at Oppenheimer Funds Inc.

Peso, Real

Mexico’s peso appreciated 14 percent against the Brazilian real last year as President Enrique Pena Nieto opened the oil industry to private drilling for the first time in 75 years. South Korea’s won-denominated bonds returned 2.6 percent as its current account surplus reached a record high.

“There will be a competition for marginal capital flows,” Zervos said in a phone interview on Dec. 20 from New York. “There will be winners and losers.” Investors should favor the Mexican peso, South Korean won and Indian rupee, while avoiding the rand, real and rupiah, she said.

Aberdeen Asset Management Plc and HSBC Asset Management said valuations in some developing nations are becoming attractive after the recent selloff.

The MSCI Emerging Markets Index traded at a multiple of 10.3 times projected 12-month earnings, compared with the 14.9 for developed markets, the biggest discount since 2006, according to data compiled by Bloomberg.

Thai Shares

Adithep Vanabriksha, the Bangkok-based chief investment officer for Thailand at Aberdeen, says he is buying Thai stocks as valuations fell to the lowest levels in 18 months. Rakesh Arora, the head of research at Macquarie Group Ltd. in Mumbai and India’s most accurate equity forecaster, says the S&P BSE Sensex will advance 13 percent in 2014.

“When people are running away, we are happy to get in,” Guillermo Osses, who oversees $14.5 billion as the head of emerging-market debt at HSBC Asset Management in New York, said in a phone interview on Dec. 19. Osses said he’s buying the currencies and short-term debt in Brazil and South Africa following their slumps.

The Fed said Dec. 18 that it plans to take the first steps toward cutting the stimulus that helped fuel the credit boom across emerging markets over the past five years, by reducing its monthly bond purchases by $10 billion to $75 billion.

Even a small capital outflow and increase in borrowing costs will have adverse impacts on governments and companies in developing countries as debt levels increased, according to Morgan Stanley.

Debt Increase

Net debt amounted to 1.25 times earnings before interest, taxes, depreciation and amortization for companies in the MSCI’s emerging market gauge, up from 0.68 in June 2009, according to data compiled by Bloomberg. Average borrowing costs for developing-country governments jumped to 6.96 percent on Jan. 2, the highest since Mach 2010, according to JPMorgan’s GBI-EM Diversified Index.

“We’re at the mature end of the credit cycle in emerging markets, which suggests we may see increased financial-sector and fiscal risks, which are not priced in by the markets,” Rashique Rahman, co-head of foreign-exchange and emerging market strategy at Morgan Stanley in New York, said by e-mail on Dec. 18.

Morgan Stanley recommended investors reduce holdings of emerging-market currencies and bonds on Dec. 3, saying the developing world “faces the challenge of regaining a decade of lost competitiveness.” The bank labeled Brazil, India, Indonesia, South Africa and Turkey as the “fragile five” in August, because of their reliance on foreign capital.

Goldman’s Call

Goldman Sachs advised clients to cut their emerging-market allocation to 6 percent from 9 percent, citing the lack of economic reforms to improve growth, CNBC reported on Dec. 22. Leslie Shribman, a spokeswoman for Goldman Sachsin New York, confirmed the report without commenting further.

JPMorgan expects a return as low as 1 percent for local-currency bonds this year, compared with an average gain of 10 percent over the past decade, according to its 2014 outlook report.

As economies in developing nations slow, political and social tensions are flaring. The Thai baht tumbled to a three-year low on Jan. 2 as anti-government protesters attempted to force Prime Minister Yingluck Shinawatra out of office.

Turkey’s stock benchmark lost 28 percent in dollar terms last year, the worst performance after Peru, as the current-account deficit widened and a corruption probe ensnared Prime Minister Recep Tayyip Erdogan’s cabinet and led to three ministerial resignations.

Corruption Probe

In Ukraine, protestors took the street last month as President Viktor Yanukovych backed out of a trade deal with the European Union in favor of closer ties with Russia.

Debt levels are increasing as incumbent governments increase spending to win voters, according to Citigroup Inc. Public debt in emerging markets rose to more than 40 percent of their gross domestic product in 2013, the highest since 2006, Citigroup data show.

“Emerging markets will probably find it difficult to sustain the steady improvement in sovereign creditworthiness that has helped to define the asset class since 2004,” David Lubin, the head of emerging-market economics at Citigroup, wrote in a note on Dec. 2.

To contact the reporters on this story: Ye Xie in New York at ; Ksenia Galouchko in Moscow at ; Kyoungwha Kim in Singapore at

To contact the editor responsible for this story: Tal Barak Harif at

me @ LOTS Trading Club (LTC)

Jumat, 03 Januari 2014

Indonesia Trade Surplus Jumps as Pressure on Central Bank Eases

By Novrida Manurung
January 02, 2014 3:05 AM EST

Indonesia posted its biggest trade surplus in 20 months in November, easing pressure on the central bank to raise interest rates further to narrow a current-account gap and support the currency. The rupiah erased losses.

The trade surplus grew to $777 million in November, from a revised $24 million in October, the statistics office said today. That exceeded the median estimate of $75 million in a Bloomberg News survey of 13 economists. Inflation was little changed in December at 8.38 percent, the statistics office said, compared with a median forecast for 8.33 percent.

Record trade and current-account deficits last year led Bank Indonesia to raise its benchmark by 1.75 percentage points since early June. The country’s most aggressive rate tightening in eight years has slowed the economy and reduced imports even as it failed to shore up a currency that became Asia’s worst performer in 2013.

“The impact of BI’s tightening has started to kick in,” said David Sumual, chief economist at PT Bank Central Asia in Jakarta. “Imports of raw materials dropped significantly in November, probably due to the anticipation of slower growth ahead.”

The spot rupiah rose 0.1 percent to 12,155 per dollar as of 2:40 p.m. local time, after declining as much as 0.7 percent earlier today, according to local prices compiled by Bloomberg. The currency lost 21 percent in 2013. Rupiah one-month non-deliverable forward prices extended gains to 1.4 percent today.

Government Policy

The trade balance improved as imports fell 10.6 percent in November from a year earlier, more than the median estimate for a 7.6 percent drop. That was a result of monetary policy tightening, and government curbs on imports of some commodities, Suryamin, chairman of the statistics office, told reporters today.

“This improvement in the trade balance is likely sustainable in 2014,” Australia & New Zealand Banking Group Ltd. economists Devika Mehndiratta and Glenn Maguire wrote in a report today. “The improvement in trade balance, coupled with our expectation for inflation to head lower, tells us that BI is likely to stay on hold for the next couple of quarters.”

Policy makers next meet to decide on rates on Jan. 9 after keeping the benchmark last month at the highest level in more than four years, pausing to gauge the impact of recent policy tightening. Indonesia’s current-account gap narrowed to 3.8 percent of gross domestic product in the three months through September, after reaching a record 4.4 percent in the second quarter.

‘Comfortable Magnitude’

Today’s data suggests the current-account deficit may have narrowed to about 2.6 percent of GDP or less in the fourth quarter, a “more comfortable magnitude” that would help reduce pressure on the rupiah, said Chua Hak Bin, an economist at Bank of America Corp. in Singapore. Inflation will continue to ease and be at about 5.3 percent by end-2014, a level within Bank Indonesia’s target range, he said.

Pressure on the declining rupiah is likely to persist later this month through the first half of 2014 toward 12,500 per dollar, said Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong. He cited raw commodity export curbs that take effect this month and uncertainty over the outcome of presidential elections set for July.

me @ LOTS Trading Club (LTC)