Niche Jungle Indonesian Infrastructure Small Caps SDGCategory: NJ Project
ndonesia is a country with great hidden potentials. Its territory is huge, highly fertile, rich in commodities. The weather and thousands of pristine beaches make it ideal for tourism. The population is relaxed and friendly.The corporate governance is, by emerging markets standards, definitely good. The Central Bank is independent. The country boasts a real democracy, while corruption is decreasing. The public debt is low, inflation under control and economic growth healthy. Growth will be supported in the next few years by a massive infrastructure plan.
While this is at least partially reflected in the valuation of Indonesian big caps, it is absolutely not in small caps. The discount between Indonesian small caps and big caps is stunning, legacy of the low visibility of those stocks in the past. Things have changed, and we expect a rapid catch up in the next few years between big caps and small caps valuation. This has dramatically happened in India, with the small caps P/E rerating from 8x to 24x. Indonesia could be next.
This Project provides a very unique exposure to this resourceful country through a well-diversified and highly sustainable (SFDR art. 8, 90% sustainable) small and micro caps portfolio that offers attractive valuations, good liquidity and an exceptional risk/reward profile.