Whether American and Europe crises spill over to China and Indonesia economy?
We believe from policy perspective, China policy to burst small asset bubbles before assets bubbles grow into catastrophic size so far is a success, Indonesia policy to damp the negative effect of sudden foreign capital outflow so far is a success also. Moreover, we do see that American and Europe crises do not worsening, means the prospect for growth already in place.
Whether indonesia will regain her previous status as asian tigers?
If we look the hard data, i.e. economic growth, inflation, purchasing power,etc., and the soft data, i.e. willingness to work hard and smart to gain prosperity and good reputation, the prospect look bright and reachable in a not so distant future.
Valuation driver for Indonesia stock market?
We see 2 driver, first government bond rating upgrade will reduce equity risk premium - means higher valuation, i.e. higher Price Earning Ratio, may be justified, second increasing market capitalization and free float - means lower liquidity risk, higher stock research analyst following, higher transparancy, will reduce market microstructure risk hence higher valuation may be justified.
Currently, IDX PER around 18X to 20 X, for Earning Per Share Growth with CAGR (Cummulative Average Growth) around 20% p.a. for 5 years, we think IDX fairly valued.
Whether 2008 stock market crash will occuring again?
2008 stock market crash is a black swan event, this event is very rare. Mostly we live in 2 world, first, a white swan event, momentum investing strategy is the name of the game, and second, good stock picking strategy, if we do our job properly, we may receive good investing return in good and bad times. We believe contrarian investing strategy will not not working at the moment.
