Indonesia’s benchmark stock index has fallen 30% this year, prompting Sweden’s Coeli Asset Management to make its first-ever investment in the country. Fund manager James Bannan stated the market is now good value, noting that President Prabowo Subianto appears willing to listen to investor concerns. Bannan recently traveled to Jakarta to assess policy direction, finding that despite populist tendencies, the president is responsive to market needs.
The selloff has pushed many Indonesian stocks more than two standard deviations below historical averages, bringing them closer to fair value. Coeli has acquired shares in Go To Gojek Tokopedia and Bank Central Asia, boosting its Indonesian allocation to almost 6% of the fund. The Coeli Frontier Markets Fund, which has major holdings in Vietnam and Kazakhstan, has returned 13% year-to-date, beating 66% of its peers.
Its annualized three-year return of 23% places it ahead of 83% of competitors. Bannan emphasized the fund targets countries with per capita income under $10,000 that are neglected by overseas investors. Despite $4.7 billion in net outflows from Indonesian stocks this year due to transparency concerns and MSCI downgrade warnings, Bannan remains confident, stating: "As long as you can find some companies that are able to navigate through that, and that you know there’s no risk of a massive devaluation or nationalization, then usually it’s OK.".
Source: Bloomberg Markets · Summarized by HeadlinesBriefing