Several local newswires including Kompas and Binis.Com are reporting that foreign investors recorded the highest inflow to the Indonesian bond market in the last year.
Based on a Bloomberg report on Wednesday, December 7, Indonesia’s rupiah-denominated government securities (SUN) were recorded as absorbing USD 467-million or IDR 7.3-trillion (at latest exchange rates.) The inflow was the biggest on a daily basis since August 2021.
Meanwhile, last November foreign inflows into the SUN market reached USD 1.5-billion (approx. IDR 23.46-trillion), or the highest in the last 3 years.
The same data suggests fund management companies had purchased USD 10.2-billion in Indonesian debt securities for 10-months in 2022, which was the highest since Bloomberg began collecting related data in 2010.
Kompas say that Indonesian bonds are used as a barometer to measure the market’s risk appetite. The level of demand for Indonesian government bonds indicates improvement in the macroeconomic outlook in line with The Fed’s stance that it is unlikely that it will be aggressive in raising interest rates.
The relaxation of the zero covid policy in China and the weakening of price pressures have also supported asset performance in the Asian region to outperform.
Jennifer Kusuma, Senior Rates Strategist at Australia & New Zealand Banking Group Ltd, said that the potential increase in foreign inflows into Indonesian SBN could still occur if global sentiment showed a lasting improvement, report Kompas.