Federal Reserve, Elections, Oil Adjustment to Restore Demand for Stock Markets i
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So far this year, foreign investors have been net buyers of stocks in markets such as Indonesia, the Philippines, Thailand and Vietnam, where currencies have recovered some of their losses in 2018.
For investors, the key moment was the Fed's moderate policy bias last month, a mitigating factor for emerging markets hit by the rise in the dollar and capital outflows in 2018.
However, the Federal Reserve is only one of the bullish factors in Southeast Asia. For Sarah Shaw, portfolio manager of 4D infrastructure at the Australian boutique fund, one of the biggest investment options for 2019 is PT Jasa Marga, the Indonesian state-owned toll road operator.
"We like Indonesia's infrastructure story very much," Xiao said. "Jasa Marga will certainly take advantage of Indonesia's ongoing infrastructure investment."
Companies like Jasa Marga, whose share price has risen by a quarter since November last year, and mobile device retailer Global Teleshop are leading Indonesia's stock market up, investors believe it will be driven by the upcoming elections, the Fed's tightening and falling oil prices.
So far this year, foreigners have purchased $1 billion worth of Indonesian shares, which have been net sellers for the past two years. In the Philippines, foreigners invested more than a third of their net sales of $1.1 billion in 2018.
The Philippine stock market rose 8.5%, while the Jakarta and Bangkok indices rose by about 6%. The baht is at the forefront of Asian currency appreciation, up 4% this year.
Stuart Ritson, emerging market debt portfolio manager at Aviva Investors in Singapore, said, "The Fed's repricing undoubtedly supports emerging market bonds and foreign exchange."
Of Ritson's $2 billion portfolio, about 12% of Indonesian bonds are one of the larger weights. Against the backdrop of high real yields in Indonesia, weak dollar and stable U.S. yields, Ritson sees the value of holding these bonds.
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