(Bloomberg) — Global money is flooding into Indonesian equities as funds exit major Asian markets, indicating a probable rotation into the country’s stocks ahead of the Federal Reserve’s imminent interest rate cut.
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Overseas investors have bought Indonesian stocks worth $933.8 million so far in August, on course for the most monthly purchases since April 2022, according to data compiled by Bloomberg. The equities are also set for their second consecutive month of foreign inflows.
Funds are heading to Indonesia as investors trim holdings in major Asian markets including China and India in favor of the relatively undervalued markets of Southeast Asia. Foreigners are also net buyers of Malaysian and Philippine equities this month, with Indonesia emerging as Asia’s favorite as its benchmark stock index set records every few days.
Indonesian stocks have started commanding greater heft as Asian funds ended their underweight stance, HSBC Holdings Inc. strategists including Prerna Garg wrote in a note. Meanwhile, Nomura Holdings Inc. strategists including Chetan Seth upgraded the country’s equities to overweight from neutral earlier this week, saying they are “possibly the best way” to bet on emerging market stocks as the Fed starts to cut rates.
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