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Driven by Domestic and Global Sentiment, Foreign Investors still Eyeing the Government Securities

The combination of sentiment from domestic and global is currently considered to support foreign investors entering the Indonesian SBN market.

Driven by Domestic and Global Sentiment, Foreign Investors still Eyeing the Government Securities
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ILLUSTRATION. Government Securities Auction 

TRIBUNBATAM.id - Foreign ownership in Government Securities (Surat Berharga Negara) continues to increase. The combination of sentiment from domestic and global is currently considered to support foreign investors entering the Indonesian SBN market.

Based on data from the Director General of Financing and Risk Management of the Ministry of Finance Until October 17, the foreign funds that have been in amounted to Rp 1,036 trillion. The total funds are divided into two types, namely SUN with a value of IDR 1,013 trillion and SBSN worth IDR 23 trillion. This shows that foreign ownership in the Indonesian SBN market was 39%.

Unlike the bond market, foreign ownership in the Indonesian stock market actually dropped. Recorded at the end of last week, foreign investors made a net sell of Rp 338.69 billion. Total for a week, foreign net sales reached Rp 1.35 trillion. 

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MNC Sekuritas Fixed Income Analyst, I Made Adi Saputra, said this was due to global and domestic sentiments. From a global perspective, Adi said, the negotiating phase that took place between the US and China pushed foreign investors into the Indonesian SBN market. "Although there is still a possibility of another tug of war between the US and China," Adi said. 

While from domestic, Adi said there was an opportunity to reduce interest rates by Bank Indonesia by 25 bps. It's just, he added, a reduction in the benchmark interest rate could be done in the meeting next week or in subsequent meetings. 

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This can be seen from the decrease in Indonesia's credit risk as reflected in credit default swap (CDS) to 83.8. Therefore, Adi estimates, the percentage of foreign ownership could still be 40%. 

Adi added, the interest in SBN was due to the maintained economic growth of Indonesia and the price of Indonesian debt securities was considered better with bonds of other countries. This has caused foreign markets to prefer debt securities over the stock market.

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In addition, in the stock market there is a season of corporate financial statements that also have been noticed by foreign investors. This is the difference between debt securities and the stock market.

Plus, Adi said the overseas stock market was considered more attractive because prices were not too expensive and earnings could grow more. 

The dominance of domestic investors must be greater so as not to rely too heavily on foreign investors. "It must be recognized that we still need foreign investors because the cheap funds are not in domestic, but in them," concluded Adi. (*) 

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Penulis: Lia Sisvita Dinatri
Editor: Lia Sisvita Dinatri
Sumber: Kontan
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