Data flows show that foreigners have been net buyers of all the Asian stock markets since May, with the exceptions of Thailand and the Philippines on the back of politics and fiscal concerns. In Asia ex Japan, Korea and India have received the largest inflows year-to-date according to Bloomberg.

While we expect capital inflows will continue to come in over the long run into both Asia and Indonesia, movements in the next one to two quarters are likely to be held hostage by increased uncertainties over the global economic growth outlook.

We are concern over continued high government debt problems and deflation in the developed world in the second half of this year. Although we do not expect a double dip recession to occur, we believe that the global economic recovery will shift into a lower gear amid the current fiscal pressure.