Indonesian stocks, the fourth-best performers in the world this year, may get a further boost from the increasingly likely landslide election victory of President Susilo Bambang Yudhoyono, Templeton Asset Management’s Mark Mobius said.
Yudhoyono, who won 62 percent of the 19 million votes counted so far for his second presidential term, has pledged to place economic prosperity at the top of his agenda, Mobius said.
Indonesian equities remain the “third- or fourth-cheapest” in the region, Singapore-based Mobius said. “A strong mandate for President SBY bodes well for the market,” he said, adding that “this should lead to a lowering of Indonesia’s risk premium, stronger growth and a more stable currency.”
The Jakarta Composite Index has rallied 51 percent this year, lagging behind only benchmark gauges in Peru, China and Sri Lanka among the 88 tracked by Bloomberg globally.
The measure is valued at 13 times estimated earnings, compared with 23 times for the MSCI Asia-Pacific Index.
The market may face “volatility” as investors await the final results of the presidential election, the appointment of a cabinet and as the president sets his agenda for the next five years, Mobius said.
“The next key milestone will be the appointment of the cabinet,” he said. “A strong mandate for SBY would allow him to appoint ministers based on ability rather than political affiliates.”
Mobius predicted on May 3 that emerging-market stocks could “break out” into a bull market at the end of 2009 as falling interest rates and easing inflation make equities more attractive. Bloomberg