Cheap Indonesian Stocks

JCI continued its downward path as selling pressures due to fear about U.S. Sub-prime problems coupled with Yen carry traders unloading their positions resulted the closely watched index downed more than 10% within 2 days. The index currently stands at 1908.64. JCI was not alone. Almost all Asian or emerging market indexes also dropped lower due to similar factors at work. But for the past 2 days, JCI’s performance was the worst within the Asian region.

The funny thing is that, this mini crash happened just after I wrote an article on this blog arguing how hot the Indonesian stocks are. So, did this recent event changed my view on JCI? No way! Unless the global market continues to meltdown, I view this event as an overblown event. For me, the event presented a great opportunity for bargain hunters to grab the stocks at cheaper, cheaper and cheaper level. There are many stocks currently selling at P/E below 10 or low teens with 3 to 5 year expected earnings growth rate above 20% or 30%. So, go get them! But, if you’re still afraid, buy the stocks gradually. But remember, your purchases should be based on 3 year holding period, because the value of short term holdings can be too noisy or erratic. Good luck!

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