Bank Central Asia, Indonesia's biggest bank by market value, surged 12 percent to a record 5,800 rupiah. The shares rose on expectations 2009 earnings will be strong, leading to a dividend payout, according to Michael Handisurya, an analyst at PT Valbury Asia Securities in Jakarta.

Astra, which sells Toyota Motor Corp. vehicles and Honda Motor Co. motorcycles, advanced 5.7 percent to a record 40,850 rupiah. International Nickel, the nation's biggest producer of the metal, gained 5.1 percent to 4,125 rupiah. Nickel for three- month delivery rose 1.5 percent to $22,217 a metric ton in London as of 9:07 a.m. local time, extending yesterday's 1.9 percent increase.

Standard & Poor's increased Indonesia's long-term foreign- currency rating one notch to BB from BB-, two levels below investment grade. The Indonesian central bank on March 11 raised its growth forecast for Southeast Asia's biggest economy to as much as 6 percent from 5.6 percent, citing rising consumer spending.

Among other stocks, PT Perusahaan Gas Negara, the largest gas distributor, rose 4.3 percent to 4,250 rupiah after Standard & Poor's raised the company's rating by one notch to BB with a positive outlook.

Eoin Treacy's view Indonesia is blessed with world class natural resources and geographical proximity to both India and China. It has demonstrated it is capable of a peaceful handover of power following democratic elections. The economy continues to expand rapidly, currently in the region of 5.4% YoY against an annual CPI of 3.8%. Foreign currency reserves stand at $69 billion and the country has a positive trade balance with exports of $59 billion against imports of $44.5 billion.

Corruption remains an obstacle to even stronger growth and has hindered investors taking a more pronounced interest in the country. As the world's most populace archipelago, Indonesia has hundreds of different languages and ethnicities spread over its thousands of islands. Separatism has been a contentious issue, particularly in the last decades but progress has been made with East Timor gaining independence and peace agreements being reached with the Free Aceh Movement among others. Political, economic and corporate governance needs to continue to improve if Indonesia is to achieve its significant development potential.

Indonesia's CDS spread peaked at over 1200 in October 2008 and has since compressed to below the pre-crisis average, signaling a clear improvement in the perception of risk attached to the country. This is especially the case when compared to the rapid expansion of spreads for Dubai and Greece over the same period. The 10yr yield peaked at over 20%, around the same time as the CDS spread and continues to tighten. A sustained move above 10% would be required to suggest that demand for the country's debt has hit a medium-term peak.

The Indonesia Rupiah is one of an increasing number of emerging market and commodity related currencies which have retraced their entire bear market declines against the Dollar. The region of IDR9000 has been an historic area of support for the US Dollar and the best part of its decline may have already occurred. Nevertheless, a sustained move above IDR9500 would be required to break the progression of lower rally highs and question the Greenback's medium-term downtrend.

The Jakarta Composite Index was an early leader; bottoming in October 2008 and breaking upwards from its base in March last year. It had become overextended relative to the 200-day moving average from August and began to lose momentum in a steady mean reversion. It appears to have completed this process and broke upwards today. While some further consolidation in the region of the 2008 high is conceivable, a sustained move below 2300 would be required to question the consistency of the medium-term uptrend.

The Jakarta Finance Index rallied consistently from March 2009 and exceeded its previous high by August. It has been consolidating mostly above 280 in a mean reversion and broke upwards once more today. This performance is all the more impressive when compared to Western banking sectors, many of which were struggling to form bases while Indonesian banks were breaking to new highs.

The Fidelity Indonesia Fund, listed in Luxembourg and in US Dollars is performing more or less in line with the Finance sector while the Market Vectors Indonesia Fund, listed in the USA performs in line with the Composite Index.