Indonesia ETFs

Indonesia stocks and exchange traded funds have been leading the equities market as the country attracts investors with its sustainable growth and companies’ improved earnings outlook.

The Market Vectors Indonesia ETF (NYSEArca: IDX) was one of the best performing ETFs over February, gaining 9.1% in the past month. [ETF Performance Report: February]

“Growth in both consumption and investment has been strong, and I believe, will be sustained for the next two to three years,” Indonesian Vice President Boediono said, reports Francezka Nangoy for The Jarkata Globe.

The Indonesian economy expanded 6.23% over 2012, supported by private consumption, which accounted for 55% of GDP. A growing middle class has helped bolster the economy – Indonesia’s GDP grew 6% each of the last three years, despite the global economic weakness.

Morgan Stanley has made Indonesian stocks its top pick due to improved earnings, according to a separate Jakarta Globe article.

“We upgrade Indonesia from neutral to positive and now rank it as our most preferred  … market,” Morgan Stanley said in a recent report.

On a survey of 110 mid- and small-sized Indonesian firms, the brokerage found that capital expenditure growth is expected to rise 15.7% in 2013 from 12.4% in 2012, profit growth will rise to 18.2% in 2013 from 16.3% and the proportion of companies with high business confidence increased to 37% from 22% in 2012.

Morgan Stanley projects the MSCI Indonesia Index to gain 13% from the current levels by the end of the year.