iShares MSCI Indonesia ETF
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BlueCrest Capital Management Ltd purchased a new position in iShares MSCI Indonesia ETF (NYSEARCA:EIDO) in the undefined quarter, according to its most recent Form 13F filing with the Securities and Exchange Commission. The fund purchased 36,000 shares of the company's stock, valued at approximately $635,000. BlueCrest Capital Management Ltd owned approximately 0.26%
The iShares MSCI Indonesia ETF has only gained 2% this year and has grossly underperformed global and EM peers. Indonesian banks, comprising over 40% of EIDO, have faced sluggish loan growth, although stable NIMs in a dovish monetary setting reflect well. Recent government stimulus to the tune of $1B could lift Q4 GDP and 2026 prospects, while further rate cuts are expected from this month through Q1-26.
Indonesian equities appear attractively valued after a decade of underperformance in USD terms. The iShares MSCI Indonesia ETF (EIDO) offers convenient access but is highly concentrated and holds several richly valued or unprofitable names. Top holdings show a mix of strong historical growth and low P/E ratios, but the ETF includes triple-digit P/E and cash-burning companies.
Indonesia's growth surprised to the upside last quarter. Equity markets trade at a substantial discount to Asian emerging markets. Politically based sell-offs may create a solid entry point.
The U.S. and Indonesia agreed to the framework of a trade agreement, the White House said in a joint statement. Jakarta will drop almost all tariffs on U.S. goods, while imports to the U.S. from Indonesia will be set at 19%, according to the statement.
CNBC's Eamon Javers joins 'Closing Bell Overtime' to talk the latest on trade talks between the White House and Indonesia.
CNBC's Megan Cassella reports on President Donald Trump's announcement of a preliminary trade deal with Indonesia that will set a 19% tariff on the southeast Asian country's U.S. exports.
CNBC's Megan Cassella joins 'The Exchange' to give the latest on Trump's ongoing trade deals.
EIDO provides easy access to Indonesian equities, but is a poor proxy for the broader economy and its growth potential. The ETF is heavily concentrated in a few big names in slow-growth sectors, limiting upside and increasing risk. While Indonesia's economy has strengths, EIDO's sector composition doesn't capture the country's most dynamic opportunities.
Southeast Asian markets, particularly Indonesia, have struggled, but EIDO is a "BUY" due to a weakening dollar, falling valuations, and potential growth bottoming. EIDO's expense ratio is lower than IDX, and it offers a purer play on Indonesian equities, with financials making up nearly half its holdings. Global trade tensions and a declining US dollar could benefit emerging markets like Indonesia, making it well-placed for short- to medium-term gains.
The iShares MSCI Indonesia ETF offers a 10% earnings yield and reasonably low expense ratios considering that it's quite an exotic exposure. The BI is prioritising protecting the rupiah by holding up rates, which is a great set up for financials which dominate the ETF. Net interest margins and loans growth rise for the largest financial holdings.
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US equities have outperformed the rest of the world for a long time now. While the US is up 58% on a total return basis during the current bull market, the rest of the world is up 13.5 percentage points less at +44.5%. Looking at the international dividend ETF over a longer time frame, over the last five years, it's up 20.6% in price and more than double that on a total return basis.
Indonesia's economy has a bright outlook ahead of it in 2024. The country's Central Bank will likely be able to cut interest rates soon. The equity markets appear attractively priced, considering the favorable growth prospects.
iShares MSCI Indonesia ETF provides access to Indonesian equities, which have strong economic growth and foreign investment. The EIDO ETF is highly concentrated in the top 2 stocks, but offers exposure to Indonesia's booming economy. Consider blending EIDO with VanEck Indonesia Index ETF for a diversified portfolio of Indonesian equities.
iShares MSCI Indonesia ETF offers exposure to Indonesian companies, with heavy concentration in the financial sector. Limited alternative options for investing in Indonesian equities exist. Indonesia's size, growth, and positive structural factors make it worth considering for investment.
Indonesia will go the polls on Wednesday to elect a new president to replace Joko Widodo. The vote's importance should not be underestimated.
Emerging markets stocks have been largely underperforming the U.S., making it difficult for investors who want to diversify their exposure. However, China's economic pain may be creating a silver-lining opportunity for investors in India and Indonesia.