Indonesian markets continue to underperform this year, with concerns over equity derating and central bank independence hitting stock prices and the rupiah.

The macro picture, by contrast, is pickup up. Our proxy growth index surged over the past few months on stronger credit, budget spending, construction and output. The picture is still very mixed, but we will be watching carefully over coming quarter to see where growth goes.

With the pickup in credit and inflation and the IDR still under pressure, we already exited our FX carry and fixed income positions last year. The question is: Is now the time to rotate into equities on the back of local demand resurgence? On balance we prefer to watch the data carefully for another few months to ensure that the macro recovery is broad-based, but this could well be the next Indonesia trade.