ETF Trends
ETF Trends

Indonesia picked up where it left off at the end of last year. Its exchange traded fund (ETF) continues to be a leader, ranking near the top of end-of-quarter lists. Why do so many now say that it could soon take on the BRICs?

Back in 2005, Jim O’Neill, economist at Goldman Sachs, and his colleagues compiled a list called the “Next 11” (N11), or countries they believe will rival the BRICs (Brazil, Russia, India, China) in terms of investment prospects over the coming decades, and named Indonesia as one of the new up and comers, writes Nicholas A. Vardy for The Global Guru. [Indonesia ETF: Destined for Greatness in 2010?]

Why?

  • Indonesia, the world’s largest Muslim nation with a population of almost 248 million, is the fourth-most populous state in the world and among the top 20 global economies in terms of GDP.
  • The country’s economy expanded more than 4% in 2009 when most economies lagged.
  • Indonesia is blessed with an abundant supply of natural resources, exporting oil, gas, plywood and textiles. [4 Reasons Indonesia Was Hot In 2009, Too.]
  • Indonesia’s President Susilo Bambang Yudhoyono, or better known as SBY, has set an ambitious plan to boost economic growth to 7% by 2014, reduce poverty levels to 8% and decrease unemployment to 5%. [What About the MAVINS?]
  • The government believes that a stable administration, lower capital costs and government funding of as much as $34 billion to build infrastructure by 2017 will all help to double Indonesia’s economy to $800 billion in the next five years. [6 Things You’re Missing By Not Investing Globally.]
  • The budget deficit of Indonesia remains one of the few in the world that is lower than 3% of GDP. Hard currency reserves are at around $56.9 billion. Per capita income grew to $2,237 by 2008.

The Market Vectors Indonesia ETF (NYSEArca: IDX) has more than doubled since its launch, outpacing the S&P 500 and outperforming BRIC countries. It has been the best-performing single country ETF in the first quarter of this year, gaining 16.2%.

For more information on Indonesia, visit our Indonesia category.

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.