Welcome to the world’s fourth most populous nation, Indonesia, where inflation is falling, economic growth accelerating and equity prices soaring. Now, as Bank of America Merrill Lynch have done today, compare that to China and India. First, economic growth: Source: BofA Merrill Lynch Global Research, CEIC Then, inflation: Source: BofA Merrill Lynch Global Research, CEIC In India and China – as with most other emerging markets – investors are anxiously waiting for more clarity on when inflation will peak and hence the authorities will be able to stop raising rates. In India inflation, currently running at 9.06%, is expected to have increased to a mighty 9.5% in June. As for China, stats released on Saturday showed that consumer prices inflation rose to a three-year high of 6.4% year on year in June. GDP data to be published on Wednesday is expected to show the Chinese economy is slowing, hit by weak global demand (though economists say that a hard landing is not likely). Investors had been patiently waiting for the Indonesian authorities to get a grip on inflation, but they didn’t stay away for long and the Jakarta Stock Exchange has made strong returns so far this year. Stock markets in China and India on the other hand are down on the year, hurt by the impact of central bank efforts to bring down inflation. ?BofA Merrill Lynch add ‘relatively lower leverage and healthier fiscal readings relative to China and India’ to Indonesia’s charms. That said, as analysts at UBS – who like Indonesia as a long term investment – point out ‘in the shorter term Indonesia in particular is well loved by investors and might have become a hiding place for those avoiding weakness elsewhere’. And inflation is not beaten in Indonesia. BofA Merrill Lynch analysts conclude: ‘Enjoy the sweet spot for the rest of this year, for now’. (citywire.co.uk)

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