The iShares MSCI Indonesia ETF (NYSEArca: EIDO) and the VanEck Vectors Indonesia Index ETF (NYSEArca: IDX) returned an average of 16.8% last year, well ahead of the 10.9% gained by the MSCI Emerging Markets Index.
Some market observers believe stocks in Indonesia, Southeast Asia’s largest economy, can rally again in 2017. Favorable government policies and a surprisingly accommodating central bank were among the policies driving Indonesian equities and the aforementioned ETFs higher.
“Indonesia has made several positive adjustments since the taper tantrum in 2013, including a narrower current-account deficit, lower gross external indebtedness and higher foreign-exchange reserves, all of which help to reduce its vulnerability,” said Andrew Tilton, Goldman Sach’s chief Asia-Pacific economist, in an interview with Bloomberg.
President Joko Widodo’s government is facing a widening budget deficit and is anticipating the tax amnesty to help bring finances back in to balance.