00:00I look at a market like Indonesia, where there is that commodity play, but the market seems to be focusing
00:05on other things, whether it's, you know, fiscal concerns, central bank independence and the like.
00:11Have we seen and have heard enough from policymakers to reassure you that, you know, things could look better from
00:17here on forward? Or do you think there's more pain ahead?
00:20So we were quite cautious of Indonesia kind of earlier this part of the year, but we're beginning to feel
00:26like the market consensus is moving, not quite there, but nearly there in actually dealing with some of these issues.
00:34I think policymakers are now beginning to acknowledge and some of the pressures, whether it's MSCI, the rating agencies are
00:42forcing the policymakers to relook and actually think about how important it is to deal with the confidence issue.
00:49We're hoping, you know, there's a few things that we're looking out for that they can try to.
00:53I think they're working very hard with the rating agencies right now to make sure that that that they can
00:58alleviate some of those concerns.
01:00But and of course, they are also, from what we're hearing, working quite closely with MSCI to deal with some
01:05of those structural issues.
01:06So we're beginning to feel like the market is forcing them to act.
01:10And I think the the BI this week kind of taking actions to indicate, again, they're willing to do what
01:16something to alleviate these concerns.
01:19And so beginning to be beginning to see the beginnings of a turnaround story for for them right now, but
01:25not quite there yet.
01:26Still a few data points to look out for. And again, confidence is one of those things that it's it's
01:34easy to lose, but it takes a little bit longer to regain the market's trust.
01:38And until that happens, we're going to have to see a bit more more, a bit more value that needs
01:45to be put in before the market becomes very exciting.
01:47You just have to overshoot. That's how it works when you've lost confidence.
01:52Yeah. And, you know, they need to convince people like you on the buy side and, you know, the fact
01:56that they are getting on these calls based on our reporting, talking to investors.
02:00That's a good thing. But it also, I think, underscores, too, that it's gotten to a point where you need
02:04to get on a call with investors, too.
02:06What more do you need to hear or see then to for at least your confidence to come back fully?
02:11So, for example, the co-commodity export kind of announcement wasn't very clear.
02:19It's going back and forth. Is it six months seems ambitious.
02:22These type of action, you know, can shake people off.
02:26Now, in itself, it may not be a bad policy.
02:29Again, communication, being clear, being systematic, which I have to say, Indonesia had become quite good of in the last
02:37kind of, you know, look at this market for a long time.
02:39And it feels like they've lost that and they need to go back to giving confidence that institutions, their work,
02:45that credibility is something that they strive to have.
02:48And then hopefully we conceive a bit of turnaround.
02:51So it is, again, underlying, you know, Indonesia's fundamentals.
02:55It's got the commodity exports that we all think that is actually structurally important in the long run.
03:01But again, confidence in the institution, in independence.
03:05And this goes across northern to Indonesia, but all the central banks become extremely important because fiscals are under pressure.
03:12Because we're having to, you know, a lot of governments are having to use subsidies to reduce the impact of
03:20the energy shock.
03:21So, again, this is where institutional credibility actually can actually reduce your risk premium quite a lot.
03:28And if you lose it, you'll have to pay up for it.
03:31Yeah, I mean, that underscores the value of having that, you know, that value to begin with there.
03:38Very quickly, 19 days from now, we enter the second half of the year.
03:42Your outlook very quickly on bond market volatility.
03:45Yeah, so we think that we will have to be volatile, which is because there's still quite a few things
03:52that have to happen that we don't see any clarity right now.
03:56We're going back and forth about the Iran war to the point that actually people are almost tired of hearing
04:04about it.
04:04But the conclusion doesn't become clear.
04:06I think that's the problem.
04:07I think as we hit towards the midterms, we think that the noise and the pressure from both sides will
04:16get higher.
04:17And at the same time, the feeding through of the inflation issue from the higher energy prices hasn't actually fully
04:25come through.
04:25We don't know if this is going to result in some sort of demand destruction.
04:29And another thing that I think people should be talking a little bit more about, one of the things that
04:35we've been maybe on our side kind of wrong about, which has been how strong the AI boom has actually
04:41helped the U.S. economy.
04:44Now, you know, we saw in the labor data, so we were probably a bit too cautious on that.
04:48However, it's beginning to become a concern that is crowding out everything else.
04:54So, yes, it's great to have an AI tech boom, but if it's only focused on that sector and then
04:59it starts to crowd out everything else, then it becomes a concern.
05:02So I think those are the things that we have to look out for.
05:04And that's why we think that until we get some of those issues bedded down, it's going to lead the
05:11market to be volatile in terms of deciding if it's too much AI, too little AI, too much rate cuts.
05:17And then all of those things will mean that we flip and flop until we reach, you know, some sort
05:23of clearer conclusions of these things are actually net net positive, or do they actually crowd out and cause a
05:29higher risk premium across the board?
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