China?s economic growth is slowing. In 2015, the giant Asian nation?s gross domestic product (GDP) expanded at 6.9%, the lowest rate seen since 1990. With China being Singapore?s largest trade partner, some are wary about a potential economic slowdown here.
Meanwhile, the skies aren?t exactly bright for many of Singapore?s fellow ASEAN (Association of South East Asian Nations) members too.
Malaysia and Thailand are struggling with political uncertainties. And while Myanmar?s recent democratic elections appear to be the dawn of a new chapter for the nation, it?s still too early to know if the new government can bring about lasting…
China’s economic growth is slowing. In 2015, the giant Asian nation’s gross domestic product (GDP) expanded at 6.9%, the lowest rate seen since 1990. With China being Singapore’s largest trade partner, some are wary about a potential economic slowdown here.
Meanwhile, the skies aren’t exactly bright for many of Singapore’s fellow ASEAN (Association of South East Asian Nations) members too.
Malaysia and Thailand are struggling with political uncertainties. And while Myanmar’s recent democratic elections appear to be the dawn of a new chapter for the nation, it’s still too early to know if the new government can bring about lasting positive changes.
Amidst the gloom is a bright spot – Indonesia. According to a recent article by Bloomberg Business, Indonesia’s Finance Minister, Bambang Brodjonegoro, appears bullish about the economic recovery of his country.
The article had showed how 2015 was a rough time for Indonesia. The country’s estimated economic growth of 4.7% for the year would be the slowest annual growth since 2009 if true. Meanwhile, Indonesia’s currency, the rupiah, had depreciated by 30% in the three years through 2015.
Yet, the finance minister suggested that the rupiah should stabilise in 2016 and that Indonesia could see more growth coming this year, with assistance from more foreign investments and infrastructure spending.
Is Indonesia the brightest economy in ASEAN now? For investors in Singapore who believe in the recovery of Indonesia’s economy, here are some ways Singapore’s stock market can allow exposure to that play.
If the economy of Indonesia can embark on a sustained recovery, domestic consumption within the country would likely rise as well.
Jardine Cycle & Carriage is the largest shareholder of Astra International, a mega conglomerate in Indonesia which also happens to be biggest automotive distribution group in the country. Meanwhile, confectionary outfit Petra Foods has a strong branded consumer business in Indonesia, with an over 50% share of the chocolate market in the country.
The Indonesia-retail-mall-focused Lippo Malls Indonesia Retail Trust (SGX: D5IU) could be another investment that may benefit from higher domestic consumption in Indonesia. The more retail spending there is taking place in the REIT’s malls, the more valuable those properties may be.
Exporting companies have been badly hit in 2015 with the slump in commodity prices and the aforementioned slowdown in China. But, if investors expect a recovery in exports to follow a stabilised rupiah, there are also companies in Singapore’s stock market that may benefit from this possible trend.
Companies such as Bumitama Agri Ltd (SGX: P8Z) and Golden Agri-Resources Ltd (SGX: E5H) export products such as crude palm oil and refined palm oil from Indonesia. If exports do improve, then the two companies above may get to enjoy some tailwinds.
For investors who prefer to use a top-down approach in investing, the possible recovery of the Indonesian economy may be an exciting story to follow. As the country grows, many of the companies mentioned above may stand to profit from it.
But, like my colleague Ser Jing had written previously, “there are many obstacles that stand between a growing macro-trend and a company’s business growth.” Investors may also want to give careful thought to those obstacles before making any investing decisions.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns shares in Jardine Cycle & Carriage Ltd.