New investment opportunities in emerging markets: an index fund Market Vectors Indonesia

 

Almost a year ago, in January 2009, in the United States began to bargain with the tool linked to the stock market in Indonesia - Market Vectors Indonesia ETF, the first fund to Indonesian index. As a part-time in 2009 he managed to show growth of over 160%, it makes sense to consider this fund closely.

The main characteristics of this tool:

index fund	ticker on the NYSE	Changes for 2009 (January 20)	change since 2010	Commission	Currency
Market Vectors Indonesia	IDX	162.90%	7.90%	1.08%	USD

Source - Reuters

In the sectoral structure of the index underlying the Market Vectors Indonesia ETF, dominated by the commodity sector, which is quite natural for a developing country. In second place is the financial sector, represented by banks of different specializations, the third - the consumer sector.

Source - Van Eck Global

in the top ten companies on the index of leading shares in a diversified conglomerate PT Astra International; among the main areas of activity marked the automotive, financial services, heavy machinery, agribusiness, infrastructure and IT. It Astra International and became a key driver of growth Market Vectors Indonesia ETF in 2009 - shares of conglomerate risen by almost 230% and continues to set new historical highs. Then take a large share of telecommunications company Telekomunikasi Indonesia, has long owned the monopoly on the provision of telephone services in the country.

Among the major fund companies identified a number of coal producers - know that Indonesia is the world”s largest exporter of thermal coal.

№	Company	weight in the fund	Specialization
1	PT Astra International	8.00%	conglomeration of 6 industries
2	Telekomunikasi Indonesia PT	7.53%	Telecommunications
3	Bank Central Asia PT	6.86%	Bank
4	Bumi Resources PT	6.83%	coal, oil
5	PT Bank Rakyat Indonesia	5.53%	Bank
6	United Tractors PT	5.18%	Engineering
7	Perusahaan Gas Negara PT	4.97%	distribution of natural gas
8	Adaro Energy PT	4.92%	coal
9	Bank Mandiri Persero PT	4.89%	Bank
10	Indocement Tunggal Prakarsa PT	4.64%	cement production

Source - Van Eck Global

Scheduled speakers Market Vectors Indonesia ETF since the start of the vision of sustainable uptrend has not yet showing significant signs of reversal.

Source - Reuters

I would like to note a number of advantages and disadvantages linked to the stock market in Indonesia. Advantages:

• Indonesia is one of the fastest growing countries in Asia - in the first 3 quarters of 2009 GDP growth above 4%, exceeding the same indicator for Singapore, South Korea, Hong Kong, Malaysia, Thailand and many other developing countries in Asia. Structure of exports of Indonesia in recent years has become a much more balanced, reflecting the dynamic industrialization.
• When you bid on the restoration of the world economy from the crisis, the investor can hope to gain from a stable commodity, which in this fund prevails.
• Indonesia”s population - the fourth largest in the world, improving the quality of life in the country, accompanied by rising demand, creates a basis for lifting the stock market.

Cons:

• Indonesia has certain elements of political instability, the country has pockets of corruption and terrorism.
• In terms of featuresba1of the index fund - to set it rather high commission, more than 1%.
• This ETF has a fairly low liquidity on the NYSE, so more suitable for medium-or long-term investment than
• for short-term.

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