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Indonesian stocks dropped for a fifth day. The Jakarta Index fell 1% at midday break, extending yesterday's 3.5% decline.

Weak earnings are to blame. In the last month, analysts lowered their earnings estimates by 0.8% and 1% for this year and next. Meanwhile, Indonesia remains expensive, trading at 15.4 times forward earnings, a 40% premium to its 15-year long-term average. Analysts now expect corporates in Indonesia to grow by 8% this year and only 7.8% next, and do not see recovery till two years from now. By comparison, India, which is also not cheap for trading at 17.2 times, is expected a full earnings recovery as soon as next year.

Foreign investors net sold $173 million Indonesian equities on Monday, the most since December 24, according to Bloomberg. As of last Friday, global funds net sold 11 of the 13 trading days. Indonesia is now in the red for the year.

HSBC last week met with investors in the US and the impression the bank got was that it was "still too early" to rotate into Indonesia. Sure, Indonesia has the lowest household debt and the strongest banks in the ASEAN region, and in the long-term could be a "gradual household re-leveraging story," but in the near-term, "currency volatility remains a risk to investing in the market," noted HSBC analyst Herald van der Linde and team.

This year, the rupiah has fallen 4.8% against the dollar, the iShares MSCI Indonesia ETF (EIDO) has retreated 3.8%. For comparison purposes, the iShares MSCI Emerging Markets ETF (EEM) gained 12% and the iShares MSCI All Asia ex-Japan ETF (AAXJ) rose 14.7%.