Indonesia’s Transformation Garners Attention

October 29, 2010 by · Leave a Comment
Filed under: Financial Crisis 

A few months ago, Standard & Poor’s raised Indonesia’s credit rating to BB from BB-, two levels below investment grade. London-based Standard Chartered Plc now predicts Indonesian debt will reach investment grade by 2012.

“Indonesia after the financial crisis was where Greece is today,” says Shane Oliver, head of investment strategy at AMP Capital Investors in Sydney, which oversees the equivalent of $90 billion. “The transformation has been amazing.”

Indonesia’s currency, the rupiah, gained 10.4 percent against the U.S. dollar in the 12 month period that ended on May 21, making it the best performer among 26 leading emerging markets. Now, the challenge for Western investors is to decide whether Indonesia’s $234-billion stock market is overheated. Indonesian shares have outperformed those of all their rivals.

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