Known collectively as ASEAN, or the Association of Southeast Asian Nations, this region is home to about 600 million people with fast-growing economies. Three of the largest markets, Indonesia, Malaysia, and Thailand, saw a 10% outperformance versus the broader Asian indices in January. For now, consider investing in this region because of its high growth, government spending, accommodating monetary policy, and burgeoning populations.
The investment case in #Indonesia is predicated on government spending, which was up almost 50% in November 2015. Much of the spending is on critically important infrastructure projects like roads, bridges, and ports. The spending is inducing a recovery in cyclical stocks, and there is a pickup in revenue among cement and construction companies. Bank Indonesia, the central bank, recently cut rates by 25 basis points, which has spruced the market. Another catalyst for the market is corporate earnings which are picking up. In terms of what to buy, consider an Indonesian ETF or Wijaya Karya (WIKA IJ), a construction and engineering company, which has a quickly growing order book because of increased government contracts.
Not every emerging market is under fire. Sure, you want to stay away from Brazil and South Africa right now. Within Asia, it’s best to avoid China, which is overleveraged and has an aging labor force.
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