RI offers 'high investment return'

The Jakarta Post, Jakarta

Indonesia ranked fourth in countries with the highest return on equity in 2007 and is likely to perform better this year in line with other investment possibilities in Asia, Deutsche Bank said Wednesday.

The return on equity investment in the country averaged 54.1 percent thanks to the economy that grew by 6.3 percent last year, Deutsche Bank chief investment officer Chew Soon Gek told reporters in Jakarta.

"Indonesia's position comes after the China free area in third place with 66.2 percent, India in second place with 73.1 percent and China's domestic market at 96.6 percent," she said, citing reports from Bloomberg.

The equity returns in Indonesia, she said, were apparently higher than its "strong" regional counterparts such as Singapore with 28.3 percent and Japan with minus 4.1 percent.

The Asia region as a whole, excluding Japan, gave an average return of 40.5 percent, far above Europe with 14.4 percent.

Chew also said Asia would not be affected by the U.S.-led subprime mortgage crisis as the region now included emerging economies that helped to stabilize the global supply-demand chain, particularly China.

"We are positive the Asia equity market will promise better returns because their economies are improving and not much affected by the U.S. economic subprime crisis," she said

For this year, she recommended investments in agribusiness commodity futures, particularly those in soybean, corn and wheat.

"The improvement of the economic condition in Asia helped to improve people's purchasing power. This led to the higher demands for foods with high proteins. Thus, an increase of prices," she said.

For conservative investors with high yield expectations, she recommended gold and hedge funds -- an instrument to protect investment capital from inflation, global economic turmoil and the weakening of the U.S. dollar.

"The gold prices will likely hike up to US$1,000 per troy ounce in this twelve-month (period). That is why it's still profitable like it was last year," she said.

Last year, gold saw 31.4 percent in returns and international current prices stand at around $923 per troy ounce.

Chew said she recommended global investors put 20 percent of their capital in hedge funds to make sure all of their investment didn't slump if stock markets went down.

"Hedge fund returns are attractive and remain stable due to its favorable diversification," she said. (ind)