India, Indonesia among top picks in Asia’s emerging markets in 2017

Global rating agencies are betting big on rupee and rupiah for foreign investments.

The Dollar Business Bureau

India and Indonesia will emerge as the most popular choices for foreign investors and strategist in 2016, due to their less dependency on external demands on bonds, currencies and stocks in the Asian emerging markets.

The other major Asian economy, South Korea, will remain on the investors’ watch list, amid prevalent concerns that the US President-elect Donald Trump will harm the global trade once he takes office early next year.

Amid the conspicuous instability in global trade and financial environment, India seems to be offering financial stability, room for further rate cuts; almost more-than-ideal situations to attract fund inflows.

However, China’s Yuan and South Korea’s won are more likely to remain unstable during the coming year. Credit Agricole CIB expected further depreciation in the Chinese currency due to the country’s balance-of-payments deficit. It predicted yuan to end at 7.25 per dollar in 2015, which is about 4% lower than the December 21 level.

Indonesia’s rupiah is also likely to remain strong due to its higher yields, backed up by the country’s commodity-producing economy.

Several global trading analysts and rating agencies have also betted big on rupee and rupiah and see enormous opportunities for investments.

Morgan Stanley and Societe Generale SA underscored that the currencies sensitive to Trump’s foreign policy will be expected to underperform in the coming year.

In global bonds, global funds pumped $7.68 billion into Indonesian sovereign debt in 2016, while selling a $6.7 billion of Indian securities.

In stocks, Indonesia’s Jakarta Stock Exchange Composite Index (JCI), India’s Sensex and Philippine equities are expected to offer most promising domestic fundamentals.

The Dollar Business Bureau - Dec 22, 2016 12:00 IST
 
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