Investing Options In Indonesia: Asia's Best Peforming Index

Asia is home to several emerging and globalizing powers, including India and China but one nation that stands out but is not largely covered in the business media is Indonesia. Little is known about Indonesia in the investing circles despite being a country made up of some 17,000 islands, which is now the 4th most populous nation in the world. One striking feature that highlights Indonesia's growth in recent years is the fact that the country has managed to avoid recession during the global downturn, unlike some of its more export-reliant neighbors. Over the last decade, Indonesia has emerged as a vibrant and plural democracy. Its economy is buoyant and a new sense of confidence is evident both within its political leadership as well as its growing civil society. Indonesia is the largest Muslim country in the world, but the Islam practiced by the vast majority of its people is liberal, tolerant and accommodative.

• The International Monetary Fund (IMF) projects Indonesia’s economy will expand 6% this year. The Chairman of Indonesia’s Investment Coordinating Board estimates growth of between 6% to 7%.

• The nation’s shares have climbed 12 percent this year and are Asia’s best performers barring Mongolia and Bangladesh, as foreign funds increased purchases after the central bank raised its growth forecast and Standard & Poor’s upgraded the nation’s sovereign debt ratings.

• Foreign investors moved more funds to Indonesian stocks in March, buying a net 4.92 trillion rupiah ($543 million) of shares after selling 1.58 trillion rupiah in the first two months this year, according to data from the Jakarta stock exchange.

• The Indonesian rupiah has risen 3.6 percent this year, the second-best-performing currency in Asia, according to data compiled by Bloomberg. A strong rupiah and low inflation have helped the central bank keep its key interest rate at a record low of 6.5 percent to support Southeast Asia’s biggest economy.

• Indonesia's stock market index, the Jakarta Composite Index, broke its record high earlier this week as it reached 3013.40 points bringing its total gains this year to 19 %, the most among Asia’s 10 largest markets.

Indonesia has managed to avoid recession during the global downturn, unlike some of its more export-reliant neighbors. Both Singapore and Hong Kong are in recession and Malaysia and Thailand are likely slipping into a recession, too, analysts say.


ETFs Investing In Indonesia:


1: The Market Vectors Indonesia (IDX) Fund: The Index provides exposure to publicly traded companies that are domiciled and primarily listed in Indonesia, or that generate at least 50% of their revenues in Indonesia. The fund has more than doubled since its launch, outpacing the S&P 500 and outperforming BRIC countries. IDX consists of the 28 securities included in the Market Vectors Indonesia Index, a benchmark that tracks the performance of companies that are based in or generate at least half of their revenues from Indonesia. IDX charges an expense ratio of 0.71%. The IDX is much more focused on Energy and Commodities that are rallying globally as the US Dollar falls and inflation signals begin to sound.

IDX Top Ten Holdings

1. PT Astra International TBK: 8.80%
2. PT Bank Central Asia TBK: 6.80%
3. P.T. Telekomunikasi Indonesia Tbk. ADR (TLK): 6.75%
4. PT Bank Rakyat Indonesia TBK: 6.06%
5. PT Perusahaan Gas Negara (Persero) TBK: 5.72%
6. PT Bumi Resources TBK: 5.57%
7. PT Bank Mandiri (Persero) TBK: 5.57%
8. Adaro Energy Tbk: 4.82%
9. PT Indocement Tunggal Prakarsa TBK: 4.72%
10. PT United Tractors TBK: 4.66%

% Assets In Top 10: 59.46%
Total Holdings: 29
Issuer: Van Eck
Expense Ratio: 0.68%

IDX Sector Breakdown
Sector Percentage
Financials 25.23%
Industrial Materials 20.03%
Consumer Goods 14.71%
Energy 13.72%
Consumer Services 8.80%
Telecom 8.79%
Utilities 5.72%
Health Care 1.79%

2: The other fund for investing in Indonesia is a closed-end fund, Aberdeen Indonesia Fund (IF), who's principal investment objective is capital appreciation through investing primarily in equity and debt securities of Indonesian companies. Its secondary objective is current income, which is to be derived primarily from dividends and interest on Indonesian securities.

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Investing Options In Indonesia: Asia's Best Peforming Index

Asia is home to several emerging and globalizing powers, including India and China but one nation that stands out but is not largely covered in the business media is Indonesia. Little is known about Indonesia in the investing circles despite being a country made up of some 17,000 islands, which is now the 4th most populous nation in the world. One striking feature that highlights Indonesia's growth in recent years is the fact that the country has managed to avoid recession during the global downturn, unlike some of its more export-reliant neighbors. Over the last decade, Indonesia has emerged as a vibrant and plural democracy. Its economy is buoyant and a new sense of confidence is evident both within its political leadership as well as its growing civil society. Indonesia is the largest Muslim country in the world, but the Islam practiced by the vast majority of its people is liberal, tolerant and accommodative.

• The International Monetary Fund (IMF) projects Indonesia’s economy will expand 6% this year. The Chairman of Indonesia’s Investment Coordinating Board estimates growth of between 6% to 7%.

• The nation’s shares have climbed 12 percent this year and are Asia’s best performers barring Mongolia and Bangladesh, as foreign funds increased purchases after the central bank raised its growth forecast and Standard & Poor’s upgraded the nation’s sovereign debt ratings.

• Foreign investors moved more funds to Indonesian stocks in March, buying a net 4.92 trillion rupiah ($543 million) of shares after selling 1.58 trillion rupiah in the first two months this year, according to data from the Jakarta stock exchange.

• The Indonesian rupiah has risen 3.6 percent this year, the second-best-performing currency in Asia, according to data compiled by Bloomberg. A strong rupiah and low inflation have helped the central bank keep its key interest rate at a record low of 6.5 percent to support Southeast Asia’s biggest economy.

• Indonesia's stock market index, the Jakarta Composite Index, broke its record high earlier this week as it reached 3013.40 points bringing its total gains this year to 19 %, the most among Asia’s 10 largest markets.

Indonesia has managed to avoid recession during the global downturn, unlike some of its more export-reliant neighbors. Both Singapore and Hong Kong are in recession and Malaysia and Thailand are likely slipping into a recession, too, analysts say.


ETFs Investing In Indonesia:


1: The Market Vectors Indonesia (IDX) Fund: The Index provides exposure to publicly traded companies that are domiciled and primarily listed in Indonesia, or that generate at least 50% of their revenues in Indonesia. The fund has more than doubled since its launch, outpacing the S&P 500 and outperforming BRIC countries. IDX consists of the 28 securities included in the Market Vectors Indonesia Index, a benchmark that tracks the performance of companies that are based in or generate at least half of their revenues from Indonesia. IDX charges an expense ratio of 0.71%. The IDX is much more focused on Energy and Commodities that are rallying globally as the US Dollar falls and inflation signals begin to sound.

IDX Top Ten Holdings

1. PT Astra International TBK: 8.80%
2. PT Bank Central Asia TBK: 6.80%
3. P.T. Telekomunikasi Indonesia Tbk. ADR (TLK): 6.75%
4. PT Bank Rakyat Indonesia TBK: 6.06%
5. PT Perusahaan Gas Negara (Persero) TBK: 5.72%
6. PT Bumi Resources TBK: 5.57%
7. PT Bank Mandiri (Persero) TBK: 5.57%
8. Adaro Energy Tbk: 4.82%
9. PT Indocement Tunggal Prakarsa TBK: 4.72%
10. PT United Tractors TBK: 4.66%

% Assets In Top 10: 59.46%
Total Holdings: 29
Issuer: Van Eck
Expense Ratio: 0.68%

IDX Sector Breakdown
Sector Percentage
Financials 25.23%
Industrial Materials 20.03%
Consumer Goods 14.71%
Energy 13.72%
Consumer Services 8.80%
Telecom 8.79%
Utilities 5.72%
Health Care 1.79%

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Tracing Investment Opportunities In Egypt

When we speak of Egypt, the first thing that comes to mind is the images of the Great Pyramid at Giza, the Nile Delta and the ancient Egyptian civilization. Far from being a civilization located on both sides of the river Nile, the modern day Egypt is the most populated country in the Middle East and the third most populous on the African continent. Despite technically considered part of geo-economic area called Middle East Egypt lies in the continent of Africa and its per capita GDP is below the global average, trailing behind other emerging markets such as Brazil, South Africa, China, but ahead of India. Egypt’s economy is much more diversified than many in the region. Oil and gas make up only about 15% of the country’s GDP, compared to as much as 50% for many oil rich states. In addition to a strong financial sector, tourism, agriculture and industrials account for significant portions of GDP.

Investors wanting to invest in the growing Egyptian economy can do so via the Van Eck Global launched the Market Vectors Egypt Index ETF which is the first US traded Egypt ETF. The fund launched on 18th February 2010, invests in 28 companies that derive at least 50 percent of their revenues from Egyptian operations. The fund comes with a price tag of 0.94 percent. EGPT is the latest off-the-beaten-path country ETF from the fast-growing Van Eck, which recently launched ETFs tied to Poland, Indonesia and Vietnam as well. EGPT follows the Market Vectors Egypt Index, providing exposure to publicly traded companies that are domiciled and primarily listed on an exchange in Egypt or that generate at least 50% of their revenues in Egypt. The Egypt ETF has a heavy weight in the financials (42%) and industrial materials (31%) sectors, a common occurrence among large cap-focused emerging markets ETFs

Egyptian Stock Market

The EGX 30 is the main index of the Egyptian exchange. The EGX 30 is comprised of the 30 largest stocks traded on the exchange, and is quoted in U.S. dollars. A total of 179 stocks were listed on the Egyptian exchange in early 2010 and another 27 were trading over-the-counter. Regarding market capitalization, Egypt is the second biggest African market after South Africa. Many stocks are very liquid and can be traded easily and with low transaction cost. Foreign participation is still quite low, as it is in most other African markets.

From the perspective of intermarket analysis, Egypt is closely correlated with the Arabian markets. Egypt had performed equally to the Arabian markets during the crisis in 2008, but regained ground better in the year 2009. According to bloomberg data, the historic rolling correlation of the EGX 30 Index with MSCI World Index is very low, offering global investors a significant risk reduction of their overall portfolios. The 12-month rolling correlation, based on daily data, was ranging between -0.15 and +0.2 from 1999 to 2008, and climbed to +0.2 to +0.3 in 2009.


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WisdomTree Dreyfus Chinese Yuan Fund: Tracking The Chinese Currency

Even though some finance experts want the US Treasury Secretary to declare China as a currency manipulator, equity markets across the world has made handsome gains whenever China has announced plans to make its currency, the yuan, more flexible against the dollar. As most of the Chinese manufacturing sector is working on thin margins, its clear that the Chinese government would not allow their currency to go down with the dollar ship. Although economists continue to be skeptical about the goodness of the Chinese currency moves, there is no doubt that China is ready to resume greater flexibility with its yuan.

For investors who want to invest in currency in the emerging Chinese market, a favorite investment vehicle continues to be the WisdomTree Dreyfus Chinese Yuan Fund (CYB). The ETF seeks to achieve total returns reflective of both money market rates in China available to foreign investors and changes in value of the Chinese Yuan relative to the U.S. dollar. The fund normally invests in a combination of U.S. money market securities with forward currency contracts and currency swaps that are designed to create a position economically similar to a money market security denominated in Chinese Yuan. The average portfolio maturity is 90 days or less. It does not purchase any money market securities with a remaining maturity of more than 397 calendar days. The fund is non-diversified.

A point to remember is that Chinese laws prevents the funds from directly investing in the renminbi, so they hold currency derivatives known as non deliverable forwards. These are similar to futures contracts, which reflect a market’s expectations. As a result the WisdomTree Dreyfus Chinese Yuan Fund (CYB) might not perfectly track the yuan.


Unlike other major currencies, the Yuan can’t be traded on the Forex market. WisdomTree’s CYB ETF is an actively managed ETF currently holding a compilation of futures contracts and swaps with different maturities that seeks to mirror the money market securities denominated in the Chinese Yuan. The fund has no current yield, so it is strictly an appreciation play versus the U.S. dollar.

CYB Issuer: Wisdom Tree


CYB Performance

52 Week Return: -1.38%
YTD Return: -0.79%
1 Week Return: 0.28%
2 Week Return: 0.48%
4 Week Return: 0.64%
13 Week Return: -0.75%
26 Week Return: -1.26%

CYB Expenses & Fees

* Expense Ratio: 0.45%
* Category: Currency
* Category Range: 0.35% to 0.89%
* Category Average: 0.5%

Another key instrument to bet on China’s currency, the renminbi (also called the yuan) is the Market Vectors Chinese Renminbi/USD ETN (CNY). The ETN is an unsecured debt security issued by Morgan Stanley that is linked to the S&P Chinese Renminbi Total Return Index. The ETN seeks to track the performance of the Chinese Renminbi against the US Dollar by investing in rolling three-month non-deliverable currency forward contracts. The annual expense ratio is 0.55 percent and the ETN doesn’t currently pay a dividend.

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The United States Oil Fund LP ETF

Gone are the days when investors looking to make a play on the rising oil prices did so through equities of energy companies that enjoyed profitability at every crude oil price spike. With the rise of the ETF industry, investors have changed the way while approaching commodity investing specially in the oil and natural gas segment. Knowing how you can invest in oil should be a part of your game plan whether it’s time to buy natural gas and oil or not.

One of the popular exchange-traded commodity product available to U.S. investor offering exposure to crude oil is the United States Oil Fund (USO). The US Oil Fund (USO) seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate (WTI) light, sweet crude oil. The fund invests in futures contracts for WTI light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum based-fuels that are traded on exchanges. The fund also invests in other oil interests such as cash-settled options on oil futures contracts, forward contracts for oil, and OTC transactions that are based on the price of oil.

The USO was created as a proxy to track the price of oil. When the fund was first created, its price was exactly 1-1 that of the current future’s month oil price. USO is essentially a rolling ETF, which means in essence that every 30 days or so, the ETF has to “roll” into the forward contracts of oil before the ones it is holding expires. Rolling the current month’s contracts into the next month’s contracts, especially lately, creates what is called contango when the future price is higher than the current price. Since the United States Oil fund relies on the use of derivative contracts rather than physical assets experts fear that it just might get entangled in the vagaries of the crude oil markets such as price contango. Some of the losses are however mitigated because the USO earns interest on the money it collects from investors, and because it only needs 10% of those funds to actually secure the futures contracts because of leverage.

On the positive side, whenever the future contract costs less than the previous month’s contract, and thus the fund actually earns a higher rate of return than the fund it is tracking.


Top Ten Holdings - USO
as of 06/30/2010
Company YTD Return % of Assets
Future Contract On Wti Crude Future Jul10 -- 24.41%
Future Contract On Wti Crude Future Jul10 -- 19.48%
Fidelity Instl MM Fds Government I -- 16.50%
FIGXX -- 9.60%
GSGXX -- 4.40%
Future Contract On F/C Ws Crude Future July10 -- 3.25%

USO Total expense ratio: 0.96%

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SLV - iShares Silver Trust: An Insight

While most investors are well aware of gold’s unprecedented march fewer are familiar with the yellow metal’s often overlooked cousin, silver. However many big investors consider the metal to be a sound investment due to robust industrial demand, its traditional role as a store of value, and its current ratio compared to gold. In any case, silver ETFs are an efficient way to invest in the metal without dealing with expenses of holding a physical amount of silver in your possession.

Silver is a very versatile metal; it’s not only popular in jewelry, but it has a wide range of industrial applications that put it in a prime spot to benefit in the recovery. It’s an excellent conductor of electricity and is popular in water purification, as well. Silver is also fast becoming a critical component of emerging technologies that will undoubtedly be critical to life in the 21st century. Silver plays a crucial role in solar technology, finding its way into 90% of all crystalline silicon photovoltaic cells, as well as silver embedded bandages and water purification devices.

On April 28th, 2006, Barclays launched the first silver exchange-traded fund in the US. named iShares Silver Trust (SLV) traded on the AMEX as SLV, the iShares Silver Trust was eagerly anticipated by silver investors ahead of its birth. When SLV was born in late April 2006, it had 21m ounces of silver stored in trust. But this highly anticipated ETF proved hugely popular and SLV demand growth far exceeded that of silver itself. So SLV’s custodians issued more shares and used this cash to buy more silver to equalize this imbalance. Just two weeks after launch, SLV’s holdings had more than tripled to 65m ounces. SLV is backed by phyiscal holdings of silver, with $5.5 billion in assets, and the fund has an expense ratio of 0.5%. Historically, when gold prices increase, so do silver prices. However, silver has industrial applications, which makes it less volatile than gold. SLV’s trading volume should also offer insights into how its popularity is growing and how silver-price movements affect the psychology of stock traders owning SLV. Not surprisingly, the volume trends in SLV are very similar to GLD’s in its own first couple years.

SLV Valuation
EPS: $-3.07
P/E: -5.7752
Relative Strength: 86
Relative Strength Ranking: 0.0478
Short Volume: 0
Options Available: 266
Exchange: NYAR

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SPDR Gold Shares: World's Second Largest ETF

With economic uncertainty and gradual weakening of the currencies specially the US Dollar, investors have been searching for a safe place for their funds. Uncertainty in the global Oil prices has not helped the investors but gold has continued its long-term advance to record high levels drawing investors to this traditional safe-haven asset.

Owning a gold-focused ETF is a good way to get physical exposure to gold without the hassle of taking physical possession – finding storage, paying for storage and so on.

Experts feel that ongoing economic uncertainty is likely to continue make gold a hot investment, with SPDR Gold Shares (NYSEArca: GLD) among the most popular means of participating. GLD opened up history’s first direct conduit between gold and the vast pools of capital in the stock markets. GLD is the second-largest ETF in the world, with $50 billion in assets, and the world’s sixth-largest owner of physical gold. Each share of GLD is backed by physical gold bullion, which makes it an alternative to actually investing in physical bullions. Several factors have contributed to the spike in assets: concerns over the Euro zone sovereign debt crisis, fears of a double-dip recession, possible inflation worries and a need for a general safe haven for assets. GLD now hoards a record total of 1,316.18 metric tons of gold, a level that rivals most of the world’s central banks.

SPDR Gold Shares offer investors an innovative, relatively cost efficient and secure way to access the gold market. Originally listed on the New York Stock Exchange in November of 2004, and traded on NYSE Arca since December 13, 2007, SPDR Gold Shares has been one of the fastest growing ETFs in the US. SPDR Gold Shares now trade on the Singapore Stock Exchange as well as the Tokyo Stock Exchange and the Stock Exchange of Hong Kong.

Today GLD is the second largest ETF on the planet, behind only SPY which tracks the flagship S&P 500 stock index. With this still-growing ETF already a force to be reckoned with, no investor or speculator in the precious-metals realm can afford to ignore it.

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