10% gain in today's market ...

After I wrote about 'Where to invest in Asia' last month, I happened to have a conversation with a few of my friends on stock investment and they commented that it is difficult to invest in the local market as they felt that Dow Jones and S&P500 is relatively high now. Any major corrections in the US market will also affect the local market, that was the thinking. I agreed with them and that set me doing a quick check back then and I wrote another post about "Is now the right time to invest".

Now, getting back to the topic on 10% gain. Last month, I asked my friends if there are interested in getting a 10% return, of course, they do (who wouldn't in current low bank interest and yield from Reits) and they asked how. I then shared with them about my post above and that historically in the election year (2004 and 2009) in Indonesia, it has shown that the Jakarta Composite Index (JKSE) performs well. 

I like visual, it is much easier to put the message across. In the 2 charts below, I have screen captured how the JKSE had performed before and after the election. In 2004, JKSE performed tremendously well, went from about 700 to 1100 in about a year. In fact, looking at the chart, it had even performed pretty well before the election year. In 2009, due to the US financial crisis, JKSE only started to perform positively after the election that year, and went from 1400 to 2500 in a year. 

How then does one invest in Indonesia? We are fortunate to be able to do this easily through ETF, one of such ETF is IDX ETF. Why this one, you may ask, well, there is no particular reason. And the only reason why I chose to invest in Indonesia through EFT is because I dont know much about the stocks listed in Indonesia, let alone being able to find one intelligently to invest.

As of the writing, IDX ETF has gained 10% if you had invested last month, and it is still trending above the weekly 20MA which is positive uptrend in the mid-term. 

Disclosure - As a responsible blogger, I need to highlight to my readers that I am long in IDX ETF.

Where to invest in Asia ...

In 2001, we heard about the term 'BRIC', when it was first introduced by Jim O’Neill, an economist at Goldman Sachs. About last year, I am sure most of you must have read or heard, the other term, the Fragile Five. Someone from Morgan Stanley decided that due to the various economic changes(negatively), the economics of BRIC is going to be going downhill. So what does this mean to investors?

Let's first look at some of the data from the wordbank, in terms of the current account balance for these countries, in particular, Brazil, Indonesia and India. Why these 3 countries, well, because they are having election this year, and historically has shown that most stock market react positively during the election year.

worldbank data

Above is the chart from the wordbank, Indonesia has the least current deficit follow by Brazil and then India. In another graph below, it shows the comparison of the current account for Brazil and Indonesia. At least from the graph, it shows that Indonesia is trending up strongly.

tradingeconomics

Now, let's look at how the Indonesia stock market has performed, we used the Market Vectors Indonesia Index ETF (IDX). In the chart below, it has managed to close above the weekly 20MA and weekly 10MA is trending up which is a positive sign.

At the current PE ratio, is it still cheap?