Indonesia ETF: BRIC Material? | ETF Trends

Indonesia’s economy and related exchange traded fund (ETF) have come a long way, baby. The country’s economic resilience during the financial downturn may prove that its economy is robust enough to be considered as one of the top countries in the emerging markets milieu.

Influential global asset manager Templeton Asset Management said that Indonesia could be ready to become a member of the BRIC (Brazil, Russia, India, China) group of major emerging countries, writes Berni Moestafa for Jakarta Globe. Templeton points to Indonesia’s fast-growing stock markets, the second-best performing stock market of last year, as a key indicator. [Why Indonesia was among the year’s best.]

President Susilo Bambang Yudhoyono expects the country’s growth to average 6.6% over the next five years.

Indonesia recently had its sovereign debt upgraded to one level below investment grade  by Fitch Ratings firm, reports Made Sentana for The Wall Street Journal. Fitch’s revised rating of Indonesia to BB+ is one higher than the Ba2 rating set by Moody’s and two levels higher than Standard & Poor’s BB-.

Ai Ling Ngiam, a director in Fitch’s sovereign ratings team, stated that “the rating action reflects Indonesia’s relative resilience to the severe global financial stress test of 2008-2009.” However, Fitch says that long-term development may be at risk if fiscal expenditure inefficiencies remain unresolved as a result of delays in electricity-tariff and fuel-price adjustments. The government has promised not to increase both prices, but many believed it was more of a political ploy instead of an economic decision.

Public debt ratios fell to 30% of GDP throughout 2009 and international reserves increased 28% to $66 billion. The firm calculates that the economy expanded 4.6% last year.

For more information on Indonesia, visit our Indonesia category.

  • Market Vectors Indonesia ETF (NYSEArca: IDX)

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.