Indonesia sell-off lures US$29 billion South African money manager who sees ‘compelling opportunities’
Cape Town-based Allan Gray says volatility offers a “fertile hunting ground” for frontier market investors
Add BT as a preferred source
[HARARE] A sell-off in Indonesian assets that accelerated during the Iran war has created a buying opportunity, prompting a South African money manager with US$29 billion in assets to enter the market.
The Jakarta Composite Index is the world’s worst-performing benchmark in 2026, down more than 35 per cent in US dollar terms among the 92 equity indices tracked by Bloomberg.
The sell-off has largely been driven by MSCI’s January warning that Indonesia could be downgraded to frontier-market status due to investability concerns and the limited number of shares available.
Authorities have since introduced a series of reforms, which MSCI will review in November.
However, market sentiment suffered another setback on Wednesday (Jul 8) after S&P Dow Jones Indices signalled that the country could eventually lose its emerging-market status if concerns over its equities market persist.
Stocks fell 1.3 per cent amid broader weakness across regional markets.
Investors have also been rattled by concerns over fiscal policy, governance, the weakening rupiah and policy predictability under Indonesian President Prabowo Subianto.
Such “periods of heightened volatility and investor uncertainty present a particularly fertile hunting ground for patient, valuation-driven investors in frontier markets,” Rory Kutisker-Jacobson, a portfolio manager at Allan Gray wrote in a note Tuesday.
“These markets are often overlooked or poorly researched by global investors, resulting in significant pricing inefficiencies and, at times, compelling opportunities.”
SEE ALSO
The Cape Town-based asset manager made its first investment in Indonesia in June in Indofood Sukses Makmur, one of the world’s largest makers of instant noodles, and is planning other investments.
“We have increased our focus on the country and (have) written several internal research reports on potential opportunities,” Kutisker-Jacobson said.
“On our estimates, Indofood Sukses Makmur trades on just over five times earnings, which we believe is a good price to pay for a dominant, cash-generative, consumer-facing business,” he said.
The Allan Gray Frontier Markets Equity Fund, co-managed by Kutisker-Jacobson, has returned nearly 9 per cent so far in 2026.
During the quarter, it initiated small positions in Mexico, Poland and Turkey, while trimming its holdings in Nigeria’s Seplat Energy, which has delivered a strong performance in 2026 on the back of elevated oil prices, he said.
Brent crude prices have retreated following a truce between the US and Iran in June that eased concerns about disruptions to shipments through the Strait of Hormuz, a key energy transit route. BLOOMBERG
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
