Thursday, September 22, 2011

Talk About Risk Off - Indonesia Down 8.9% Overnight

Little noticed in the mess overnight, is a tremendous drop in Jakarta Composite Index, to the tune of 8.9%.  While many may say - "Indonesia? Who cares?", this has been possibly the best performing market the past 3 years.  Even as other Asian markets - especially India and China, have suffered through 2011, Indonesia has been essentially teflon, until the past few weeks.   And this comes off incredibe results in 2009 and 2010.

Seeing such a large drop in this 'risk on' market is another canary in the coal mine.  Much like gold, it appears this has become a very crowded trade - and now many lemmings appear to be trying to run out of the same door.

  • Indonesia stocks plunged by the most since October 2008 as overseas investors cut holdings, while the rupiah rallied from a one-year low after the central bank said it will intervene to slow the currency’s drop.
  • The Jakarta Composite Index (JCI) sank 8.9 percent to 3,369.14 at the 4 p.m. local-time close as investors sold riskier assets amid concern global economic growth will slow. The gauge has tumbled 19.7 percent from a record high on Aug. 1.
  • “Investors are afraid that if they don’t sell now, shares will plunge further given the worsening condition of the global economy,” said Soni Wibowo, who helps manage $1.98 billion at PT Bahana TCW Investment Management in Jakarta. “Risk aversion has risen.
  • Indonesian stocks are the most “crowded” trade this year on a net-foreign-buying basis, Credit Suisse Group AG said in a report this week.
  • The rupiah is still the best performer among the 10 most- active currencies in Asia outside of Japan since end-2008, having gained 20 percent, according to data compiled by Bloomberg.
  • Foreign investors are dumping local assets,” said Akbar Syarief, who helps manage $98 million in assets at PT MNC Asset Management in Jakarta. “They’re seeking the safety of U.S. Treasuries while waiting out developments in the U.S. and in Europe.”

No position

[May 22, 2009: Indonesia: A Must Own Emerging Market]
[Jul 9, 2009: Indonesia's Star Continues to Rise on Back of Yudhoyono's Re-election]  
[Aug 10, 2009: Indonesia Expands at Fastest Pace in Southeast Asia]
[Jan 22, 2010: - How the BRIC was Born]
[Apr 1, 2010: Indonesian Market Continues to Star in 2010 - Market at All Time Highs as Country Opens Itself Up Further to Foreign Investment]
[Aug 8, 2010: NYT: After Years of Inefficiency, Indonesia Emerges as an Economic Model]
[Oct 9, 2010: [Video]  CNBC's Tim Seymour & Team - The Prospects of Indonesia]
[Jan 11, 2011: BW - The BRIC Debate, Drop Russia, Add Indonesia?
[Feb 7, 2011: Irony in Indonesia]
[May 27, 2011: NYT - Jakarta Struggles to Cope with Rapid Growth]

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