A Top-Performing Fund Suddenly Gets Positive on Indonesia Stocks


(Bloomberg.com, 25 May 2018) A top Asean money manager has turned positive on Indonesian equities, once the worst performers in Asia this year.

Samsung Asset Management Co., whose fund has beaten 94 percent of peers over the past five years, raised the country’s shares to overweight from underweight, according to Alan Richardson, investment manager at the company in Hong Kong. Richardson says Indonesian stocks have already hit bottom and will stabilize from here.

The two-notch upgrade coincides with foreign investors’ return to Indonesia after they pulled more than $8 billion from the stock market in the past year. It also came after the central bank raised its benchmark rate for the first time since 2014 and pledged to take stronger measures to maintain currency stability. Indonesia’s benchmark stock index has gained 3.4 percent this week, heading for its strongest weekly gain since December 2016, and paring this year’s decline to less than 6 percent.

“Foreign funds are more likely to buy than sell as they get more positive price feedback of the stock market bottoming,” Richardson said. “I expect a 15 percent return in dollar terms, based solely on market mean reversion supported by stabilizing capital markets.”

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