(MENAFNEditorial)
JAKARTA February 11 2015—Foreign investors are predicted to refrain from entering into Indonesian bond market in February after the re-emergence of discourse to increase the US benchmark interest rate.
The US Labor Department on Friday (6/2) said the salary of workers in nonagricultural sector rose in January 2015 or higher than the initial expectation. This indicates the recovery of the US economy and boosts the re-emergence of the discourse for the increase of Fed fund rate in the middle of this year.
Global Markets-Financial Analyst Manager PT Bank Internasional Indonesia Tbk. Anup Kumar said the price of government securities (SUN) is likely to strengthen in limited manner throughout this month.
“As long as foreign investors do not go out from the bond market the yield of the10-year government securities is around 6.7% in this February” he said Sunday (2/8).
If capital outflow occurs it can push the yield of the 10-year government securities to a level of 7.3%.
According to Anup bond price rally in January was driven by capital inflow of around IDR40 trillion. The high number of purchases of the bond was mainly due to investors’ expectations toward real yield that continues to widen. “For February the level of aggressiveness has reduced. If the Fed gives the exact date for the increase of the benchmark interest rate the outflow could happen” he said.
PT Bank Mandiri (Persero) Tbk. Bond Analyst Andry Asmoro said there is still a chance foreign investor fund to flow into the Indonesian bond market including sukuk market even though it is not swift as in January. The reason is because Indonesia is still considered interesting in terms of yield and economic growth expectations.
According to him foreign investors eventually choose the developing countries as a place to invest than the US Europe and China. If compared to the US Indonesia’s benchmark interest rate is higher to 750 bps. Read more…
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