ETF Trends
ETF Trends

Emerging markets exchange traded funds have come storming back in recent weeks, but that does not mean the forecast is sunny for the entire group.

The iShares MSCI Indonesia ETF(NYSEArca: EIDO) and the Market Vectors Indonesia ETF (NYSEArca: IDX) are the primary ETFs tracking Southeast Asia’s largest economy and the two are off an average of 11% year-to-date. That loss has been significantly trimmed as the EIDO and IDX have gained an average of 18.5% since the start of September. [Indonesia ETF Bounces After Deep Sell-Off]

Some analysts still see risks ahead for Indonesia, a market that has been wracked by inflation, a widening current account deficit and a weak rupiah, this year’s worst-performing emerging markets currency.

“Higher subsidized fuel price, higher minimum wages, weakening of rupiah and higher interest rates are expected to pressure earnings growth in 2013-14. We expect earnings growth to reach +3% and +10% in 2013-14, respectively, lower than consensus estimates of +9% and +15%. Thus, consensus downward adjustments are likely,” Citigroup said of earnings expectations for Indonesian firms in a note obtained by Barron’s.

Even with the struggles of Indonesian stocks this year and that concerning outlook from Citi, EIDO and IDX holdings are not particularly cheap at a time when large developing economies such as China and Russia are home to some of the most heavily discounted stocks in the emerging world. [Indonesia ETFs Still Aren’t Cheap]

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