Category Archives: Indonesia

A Tale Of Two Bond Curves: Malaysia vs Indonesia

Thanks to Denise Law for drawing my attention to this…

Malaysia government bond yields fall post-elections:

Govt bond curve - Malaysia May 2013

While Indonesia government bond yields rise after S&P reduced its outlook on Indonesian credit from positive to stable:

Govt bond curve - Indonesia May 2013

Related reading: How Singapore’s currency club fell apart

Is Asia’s Foreign Exchange NDF Market The Next Domino To Fall?

2013.03.15.ASEAN mapThat’s the basic question I take away from this recent article from the FT’s Jeremy Grant, which uses a wrongful dismissal lawsuit ex-UBS traders are bringing against their former employer as a gateway to discussing price transparency in the Asian non-deliverable FX market.

The important bit doesn’t come until the second half of the article:

“Quite how this “shadow” fixing system has emerged in Singapore, alongside the official rates set by southeast Asian central banks, is a bit of a mystery. Bankers say it was because traders didn’t historically trust the onshore fixing. It is easy to forget the depth of anti-market feeling in Malaysia during the Asian crisis.”

Actually, how it emerged in Singapore was rather straightforward. Continue reading

Chart Of The Day: Emerging Markets Currency Wars Landscape

This is interesting:

2013.03.06.Swan FX Diagram

2013.03.06.Swan FX Table

And here’s an explanation of what we’re looking at:

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Caravel Management makes a case for Frontier Markets

You may have heard by now that the jig is up on the BRIC acronym as an investment class. But we’ll all still have to spend at least another couple years discussing how it doesn’t work, so if you’re just getting used to BRIC, fear not, you can still throw that one around and give the appearance of knowing what you’re talking about.

In any event, I have a new investment theme acronym. This is better than CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa), MIST (Mexico, Indonesia, South Korea, Turkey), PIIGS (Portugal, Italy, Ireland, Greece, Spain), CASSH (Canada, Australia, Singapore, Switzerland, Hong Kong) and even SWAG (Silver, Wine, Art, Gold).

Ready? Here it is: VIMBENT.

You heard that here first.

Vietnam
Indonesia
Mexico
Bangladesh
Egypt
Nigeria
Turkey

These, apparently, are the countries New York-based Caravel Management is invested in, according to a Bloomberg interview with portfolio manager Caglar Somek earlier this week:

There’s only so much one can fit into a six-minute segment, so to the credit of both interviewer and interviewee, here’s what seem to be the main ideas behind the VIMBENT strategy:
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Rapid Growth Markets: Behold THE FUTURE

I’ve just spent way too much time playing with Ernst & Young’s interactive spider graph thingy that allows you to compare their 25 “rapid-growth” markets across a range of macroeconomic indicators. According to E&Y, these 25 countries possess the most promising “long-term potential to generate strong business opportunities.”

So since a picture is worth a thousand words, here’s how all 25 of these economies will change from 2011 to 2016 from the meta-macro view, compared against each other:

Okay! Is everybody ready to go out and make some money?
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9 Emerging and Frontier Markets Uncle Sam wants YOU to export to

On the heels of the latest update to the World Bank’s annual Doing Business index, I thought I would use this opportunity to try a different take on the usual blather surrounding this study about which country did or didn’t move up five spaces in the shareholders’ rights category.

I recently happened to attend a function sponsored by the US Export-Import Bank that was part of its Global Access for Small Business Initiative. In the interest of not getting bogged down here by too much bureaucratese, the nutshell of this initiative can be summed up as such:

“Increasing exports and access to foreign markets is a proven tool for strengthening our economy and creating durable jobs. The United States is well positioned to capitalize on the types of products and services that fast-growing markets around the world are demanding. Ex-Im Bank is committed to ensuring that American small businesses can compete in this global climate.”

For those not in the habit of tuning in to this sort of thing, this initiative basically is targeting American small businesses looking to export to emerging and frontier markets. At first glance, this isn’t too far off from what the Overseas Private Investment Corporation (OPIC) does, but the focus here is less about investing overseas and more on businesses looking to export overseas. Where exactly overseas? Officially, anywhere, but Ex-Im representatives made a point of letting the audience know that those looking to export to the following nine countries would receive special attention, determined by “a variety of macroeconomic indicators”:
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EMPEA’s Sarah Alexander on a post-BRIC world

An old saw from the journalism universe has it that once you start hearing the same quotes from different people, it means one of two things: either you’ve reported the hell out of the story and it’s time to start writing; or you haven’t dug deeply enough and have more reporting to do.

Helpful, right?

Anyway, Emerging Markets Private Equity Association President Sarah Alexander was on CNBC yesterday saying some things that I know I’ve heard somewhere before…I just can’t remember where…

Basically, for those looking for more assurance they’re not alone, EMPEA members apparently like these countries and regions:

Turkey
Indonesia
Sub-Saharan Africa
Colombia
Peru
Mexico

…and these industries:

Health care
Pharmaceuticals
Consumer goods
Infrastructure

Is there an echo in here?

Indonesia’s economy as the driver of Asia’s revival, part II

It seems the global scramble for thought leadership credibility has now led to Indonesia.

This is a great example of how flaccid the definition of analysis has become and how lazy research professionals are if they can get away with it.

On the heels of my summary last week (not an analysis by any stretch of the imagination, even I acknowledge that) of MGI’s Indonesia report, some outfit called Qineqt basically just ripped off the report’s executive summary and shoved it through Seeking Alpha’s hit-or-miss editorial team to come up with a 1,000-word ticker-laden paraphrasing of the report (see the entire abomination here, if you really must), accompanied by an amazingly elementary graph with a misspelled source (“Word Bank”) that really tells us nothing:

Graph 1: FDI

The more pertinent point here is that the first commenter on the article, an apparent expat living in Jakarta, has helpfully pointed to a number of sources that fill in the missing downside to investing in Indonesia, all from just the past couple of weeks: Continue reading

Indonesia as the driver of Asia’s economic revival

If you can withstand all the coulds, shoulds, mights, caveats and other hedges, McKinsey’s latest Indonesia analysis has some interesting nuggets in there. It’s all good primer material for anyone who wants to get up to speed on what’s happening there but the following excerpts I found the most interesting.

Exports generate only 35 percent of Indonesia’s GDP, with non-commodity exports accounting for 11 percent; the rest comes from domestic consumption. Indonesia’s total exports as a share of GDP are roughly half those of Malaysia in 1989 when the average income there was similar to Indonesia’s today. The share of non-commodity exports in Indonesia’s GDP is about one-third that of Thailand or Malaysia today…

 

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The Next 5 Emerging Markets To Watch?

As part of the Atlantic Monthly’s sporadic coverage of developing markets, it recently proposed Turkey, Indonesia, Kazakhstan, the DRC and Mexico (with Nigeria as the sixth man coming off the bench) as the next 5 emerging economies to “change the world.” And because I hate websites that force you to click through a different page per item of a list, presumably just to keep you clicking, I am summarizing it all on one page here to make for easier digestion.

Directly from the intro:

“Now that we understand the global hierarchy to be less fixed than it once was, who will rise next? The conditions for a rising power are so complicated and so reliant on outside factors beyond any one country’s control that accurately predicting them would be impossible. Still, some countries seem better positioned and better managed than others.”

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