We add a positive view on Indonesian equities to our high-conviction absolute views.
The favourable US growth outlook will support a shift from fixed income to equities, while a moderately stronger dollar and relatively limited disruption to global trade will benefit EM assets. GDP growth in Indonesia is among the highest in major EM economies and the outlook for structural reform is increasingly positive, although economic nationalism remains a drag on growth.
Bank of Indonesia's cautious monetary policy and focus on currency stability will ensure that inflation remains within the target range and that expectations are well anchored, reducing risks for investors.
Indonesian equities have underperformed since the US election, offering a relatively attractive entry point.
Trade makes 5.6% by the time we close it on 20 November 2017.