Frontier Market Indonesia Faces Strong Headwinds

Downward pressure for Indonesian stocks still exists, despite an already significant drop this year. Twin deficits, high inflation, and slowing growth are only part of the problem. The investment community is increasing the focus on China - which detracts investor's attention from Indonesia's long term positives. Also, a major negative for Indonesian equities is uncertainty over the elections in April. Over the next three to six months, the Frontier Investor may be wise to underweight Indonesia relative to Gulf States (GCC) and other ex GCC Frontier Markets (FM).