US Tech Stocks vs Indonesian Stocks: The Hidden Gems of IHSG
By: Kenny Soejatman
Many investors are drawn to the massive gains from US technology stocks like NVIDIA. However, behind the glitter of Wall Street, attractive opportunities can often be found closer to home: the Indonesian stock market. With valuations still relatively cheap compared to GDP, the IHSG holds hidden gems that global investors frequently overlook.
Comparing US Tech Stocks vs Indonesian Stocks
One afternoon in the lobby of The Palace Hotel, San Francisco, Mrs. Sari Tanuwijaya arrived carrying a Birkin Himalaya bag, an anniversary gift from her beloved husband. From the elevator emerged Mrs. Laksmi Hartono, her former classmate from pastry school at Institut Cordon Bleu Paris, class of 2012.
“Sari, darling!” exclaimed Laksmi, her voice melodic like a modern gamelan. “What a surprise to see you here. On a healing trip to California?”
Sari took the chance to show off her profits from US tech investments. “After making gains on NVIDIA, why not visit the US while checking in on my son studying Business Administration at UC Berkeley.”
US Stock Valuations Are Extremely High
“Congrats, Sari. How much did it go up?” asked Laksmi, recalling Sari’s long-time habit of flaunting her wealth.
“About 1,300 percent since I started investing in 2015,” Sari answered confidently.
Laksmi smiled sweetly. It turned out that Sari’s US tech stock play was still overshadowed by her own gains in Indonesian stocks. Being a good friend, she shared why she preferred investing in Indonesia:
“US tech stocks have gone up a lot, but they’re way too expensive now. The S&P500’s market cap is already 211% higher than US GDP. Meanwhile, Indonesia is still cheap—IHSG’s market cap is only around 55% of GDP.”
The Risk of a Tech Stock Bubble in the US
“But tech stocks aren’t the same as regular stocks, Laksmi...?” Sari countered. Laksmi replied:
“True, tech stocks have great growth prospects. But the market cap of the Magnificent Seven, like NVIDIA, is nearly five times that of all the other US stocks combined. This is even worse than the dot-com bubble. I’d still prefer Indonesia. Valuations make more sense.”
Sari tried to defend herself. “But growth is unlimited, Laks. AI is going to take over the world.”
Patiently, Laksmi explained:
“You’re right, AI growth could be unlimited. But US companies haven’t been able to make money from it yet. Training costs are sky-high, and most US firms only use AI for things like customer service chatbots. The cost savings are minimal—profits could increase by just 5%. That’s based on MIT research.”
Hidden Gem Examples in Indonesia
Sari tried again. “But my NVIDIA stock went up 1,300% since 2015. Can any Indonesian stock do that?”
Laksmi started tapping her iPhone 16 screen.
“Okay, 1,300% is impressive. But Indonesia has its own baggers too. I got into MLPT that same year. It’s up 7,700% by now. Indonesia’s tech stocks did even better, hahaha.”
Sari began regretting her flex—she had underestimated Laksmi. “This means war. I need to get even,” Sari swore to herself after parting ways.
Searching for Hidden Gems in IHSG
A week later, after landing at CGK from LAX (Cathay Pacific, Business Class with Aria Suite), she immediately began a deep dive into Indonesian stocks using her husband’s Bloomberg Terminal.
“Maybe there’s another Indonesian stock like MLPT that hasn’t surged yet,” she wondered. “How does Laksmi find these? Where are the hidden gems in IHSG...?”
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Conclusion
Indonesia’s stock market still holds plenty of potential, with valuations far more reasonable compared to US tech stocks. For investors seeking long-term opportunities, discovering hidden gems in IHSG can be a rewarding strategy.
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