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When Right Back Enter the Indonesian Capital Market

When Right Back Enter the Indonesian Capital Market
QUX.ME, JAKARTA - The projection of the results of last week's general election (election) gave a positive signal: time to buy Indonesia. This is the right time to enter the domestic capital market.

The sign appears. Thursday (18/4), foreign investors booked a net buy of Rp 1.43 trillion. The rupiah spot rate also rose to reach Rp. 13,975 per US dollar (US) after a quick count showed Joko Widodo-Ma'ruf Amin won the election.

Investors' perceptions of investment risk in Indonesia also improved. The improvement in perceptions of investment risk is reflected in the movement of credit default swaps (CDS).

CDS Indonesia 10-year tenor had reached 157.85 on Wednesday (17/4). This is the lowest level for the past year. Last weekend (4/19), CDS returned to the level of 160.73.

Economist Samuel Sekuritas Indonesia Ahmad Mikail assessed that the stability of CDS Indonesia shows that investors, especially foreign investors, have been priced in with all the risks in Indonesia during the election. Solid Indonesian fundamentals are also positive for perceptions of investment risk.

Moreover, a few days before the election, the government announced Indonesia's trade balance last March, a surplus of US $ 540 million. Previously, Indonesia's foreign exchange reserves in March also rose to US $ 124.53 billion.

Indonesian Bond Pricing Agency (IBPA) analyst Nicodimus Anggi Kristiantoro added that the stable exchange rate of the rupiah, with a tendency to strengthen, also gave positive sentiment.

Mirae Asset Sekuritas analyst Hariyanto Wijaya said that Indonesia's fundamental fundamentals make Indonesia's financial markets more attractive. "Indonesia is one of the few countries capable of maintaining GDP stability amid a global economic slowdown," he wrote in his research on Friday (4/18).

Anushka Shah, VP, Senior Analyst at Moody's Investor Service, said that the re-election of incumbents had a positive impact on Indonesia's debt rating. "This is good for the sustainability of policies, especially the policy mix that has a positive impact on growth and investment," he wrote, in research last Friday.

Government bond yields (SUN) also tend to fall. Last Thursday, the benchmark 10-year SUN yield was at 7.56%. The previous week the yield of the 10-year SUN was still at 7.65%.
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Indeed, in April until Tuesday (16/4), foreign ownership in state securities (SBN) fell Rp 14.43 trillion to Rp 952.69 trillion until April 16. Senior VP & Head of Investment Recapital Asset Management Rio Ariansyah considers this phenomenon reasonable, because before the election investors were still wait and see.

He is optimistic that investors' perceptions of investment risk in Indonesia will continue to improve and massive foreign funds will be followed into the Indonesian bond market. "Foreign funds are likely to enter after the vote recap on the KPU," Rio said.

I Made Adi Saputra, Fixed Income Analyst MNC Sekuritas, said that short tenor government securities will be hunted more by investors. Because, investors are still worried that there will be pressure from the projected decline in global economic growth.

Some analysts predict JCI can reach 6,800-7,000 this year. The condition is that there are no conflicts and turmoil after the election.