Indonesia Decides

Presidential elections will be held in Indonesia on 8 July 2009. There are three key candidates- Ms Megawati Sukarnoputri, Mr. Susilo Bambang Yudhoyono (Popularly known as SBY) and Mr. Jusuf Kalla. It’s a resource rich country, 4th most populous nation on earth and at one time it was one of the most important countries to do business with, in Asia.

It may not be on any major analyst’s map; but I believe that BRIC will soon have one more I into it i.e. Indonesia (BRIIC).  Once a stable government is in place, sooner or later the country is headed for growth days again. Though based on what I hear and read, I think there are highly likely chances for SBY retaining the power, but regardless whoever wins, if wins with majority, it’s going to be a good for for the longer term health of the country.

So what?

Remember India, what happened soon after Congress came to power with majority.  The Sensex headed for Mt Everest.  So here is what I am thinking as a directional trade idea for this event. Going long; Here are couple of counters to look at- TLK, IF, IDX

Here are the profiles for each of these from Google Finance-

PT Telekomunikasi Indonesia TLK – PT Telekomunikasi Indonesia Tbk (TELKOM) is a full service and network provider in Indonesia. The Company provides fixed wirelines, fixed wireless, cellular, as well as data & Internet and network interconnection services, both directly and through its associate companies and subsidiaries. The Company is involved in the planning, building, providing, developing, operating, marketing or selling, leasing and maintaining telecommunications and information networks. . …., almost everything else in telecommunication (my thoughts)

Market Vectors Indonesia Index IDX – Market Vectors Indonesia Index ETF (the Fund) seeks to replicate the price and yield performance of the Market Vectors Indonesia Index (the Index)].

The Indonesia Fund, Inc. (IF)– The Indonesia Fund, Inc. (the Fund) is a closed-end, non-diversified management investment company. The Fund seeks capital appreciation as a primary objective and income as a secondary objective, by investing primarily in Indonesian securities..

I was looking for a good option play, but the liquidity is not present. My preference is for IF (~$8.1) (an ETF for Indonesia). I expect 5-10% move post result announcement. Pls keep in mind there are no options on this and hence you may not have a clear way to protect on downside. And therefore I suggest you may want to do your research before making an investment.

I am playing it via a Real Estate Investment Trust (REIT); a company called LippoMapleTree listed on Singapore exchange, Div yield is about 15% and market price is almost 50% of net asset value. It trades in a lot of 1000.

This is a speculative trade and therefore money management is of utmost importance. I strongly suggest, should you decide to play this, you should keep your investments to the extent you are comfortable to lose any amount.

Take your chances, but do it carefully.

Profitable Tradng, OP