Indonesia and the Philippines won awards for the hottest
investor destinations in February.
tracking the Asian countries scored the biggest gains in a month
in which the global
pulled back slightly, closing in the red.
MSCI Indonesia Investable Market Index (
Market Vectors Indonesia Small-Cap (
Market Vectors Indonesia Index (
): +9.17 %
IShares MSCI Philippines Investable Market Index (
) : +7.41%
The major global benchmarks by contrast took a breather from
strong uptrends that started in June.IShares MSCI EAFE Index (
), tracking developed foreign markets, fell 1%.IShares MSCI
Emerging Markets Index (EEM) 2%.
Indonesia and Philippines are the two biggest growth stories
in Asia as investors look beyond China and India, says Minyi
Chen, chief financial officer and chief operating officer at
TrimTabs Investment Research in New York. "Investors were
skeptical and in general shunned the emerging markets in the
second half of last year," Chen said in an email. "I think the
rally in these countries shows that investors are now starting to
move back again."
Indonesia and the Philippines enjoy strong economic growth
while holding relatively low debt levels compared to many
developed countries. Their economies are less dependent on
commodities and exports than most emerging markets.
"In emerging markets, financials as well as consumer sectors
(consumer discretionary, consumer staples, and health care) have
been greatly outpacing commodity sectors since 2008," Tony Welch,
an emerging market analyst at Ned Davis Research, wrote in an
"The market leaders have been the economies that can rely on a
strong consumer and not as dependent on exports to developed
markets, especially to Europe."
Reasons To Visit Indonesia
When measured in local currency, the Indonesian stock market
returned 12% last year. But IDX returned a paltry 3% vs. 19% for
EEM because of the rupiah's weakness against the dollar. IDX's
chart has broken out a bullish cup-with-handle base with a 29.82
buy point. It broke out of the pattern in double average volume
Wednesday and currently trades 7% above that buy point. It's 9%
below its August 2011 high of 34.99.
IDX has a 65 IBD Relative Strength Rating and a superb
Accumulation/Distribution Rating of A- on an A-to-E scale. This
shows its price action has outpaced 65% of the market the past 12
months and that
big institutional investors
are heavily buying shares and selling few.
Indonesia's economy is thriving from a credit ratings upgrade,
strong foreign investments, increasing consumption, import
growth, Neena Mishra wrote for
Zacks Investment Research
EPHE reigned as the No. 1-performing country in Asia last
year, returning an eye-popping 48%. It's up 16% year to date.
It's trading 24% over a 32.39 buy point in a bullish,
three-weeks-tight pattern. That occurs when a stock or ETF closes
within 1.5% of the prior week's close for two weeks in a row.
This tight trading action shows that buyers support the price at
the slightest bit of selling.
EPHE has a very strong IBD RS and Acc/Dis Ratings combination
of 90 and A-, indicating it's outperformed 90% of the market over
the past 12 months and institutions are heavily buying
"Thanks to its large educated young population that can speak
English, the Philippines has been growing in popularity as a BPO
(business process outsourcing) destination," Mishra wrote in an
email. "(The) current administration led by President (Benigno)
Aquino has been very effective in combating corruption and tax
One of the major risks of investing in these countries is
fluctuations in foreign currencies, Chen warns.
"A depreciation in the Indonesian rupiah or Philippine peso
can be a drag on performance," Chen wrote. "Also, investors
should understand that if they invest in country ETFs, those ETFs
will have a higher correlation with the U.S. stock market than
the shares traded on the local exchanges. Therefore it may give
you less diversification than you'd expect."
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