The Indonesia Stock Exchange (IDX) grew 46% and foreigners doubled their equities stake to US$2.2 billion in 2010. With stats like that, it’s no surprise expectations are high for 2011, even amid concerns for the global economy in general. After Thailand, Indonesia’s market was the strongest performer in Asia.

There are still hopes major ratings agencies will upgrade Indonesia to investment grade this year, attracting institutional investors from overseas. It currently ranks two grades below that level. Processed foods, cosmetics and hygiene products from companies like Unilever are finding new domestic customers, while the banking sector is expected to grow further as lending increases. Should China’s demand for natural resources and energy continue at 2010 levels, Indonesia will need to meet it.

While no downsides are evident at the moment, forecasters are always cautious of unexpected (and inevitable) events and possible shocks. It seems the major internal concern for Indonesia’s economy in 2011 is a fear of overheating, becoming a bubble if too many join the rush and share values rise too quickly.

source & article: Channel NewsAsia

see also on CNA: Indonesia keeps interest rates steady to curb ‘hot money’ inflows & higher-than-expected inflation