The domestic bond market has provided a 13.3 percent return in the period from January to September 8, 2017 (ytd), higher than the stock market return of 10.58 percent. Capital inflow also continues to increase and has reached a record of USD 11.1 billion as of September 13, 2017.
Wahyu Trenggono, President Director of Indonesia Bond Pricing Agency (IBPA), said the bond market development is supported by Indonesia’s strong economic conditions and positive sentiment from global central banks. Government bonds provided higher returns of 13.73 percent ytd as indicated by Indonesia Government Bond Return Index (INDOBeXG). Meanwhile, the return of corporate bonds by Indonesia Corporate Bond Return Index (INDOBeXC) reached 10.43 percent ytd. “The weight of government bonds on Indonesia Composite Bond Index (ICBI) is huge due to the large portion,” said Wahyu.
Roby Rushandie, Analyst of IBPA, said there are indications that foreign investors are moving their funds from stock market to bond market, which is visible from the average daily transaction bond value increasing 10.97 percent last week from IDR 15.5 trillion to IDR 17.2 trillion. Another indicator is the relatively stable rupiah exchange rate at IDR 13,300 per US dollar.
“In the monthly transaction in bonds, foreign investors always posted a net buy which was the highest in March at IDR 31.33 trillion,” said Roby. Currently, foreign ownership in tradable government bonds reached 39 percent of the outstanding IDR 2.900 trillion. Until the end of this year, the bond market is expected to still be able to give a return of about 10 percent. (*)