JAKARTA (TheInsiderStories) – Indonesia’s Financial Service Authority (FSA) noted foreign capital out from the country reached US$953.47 million (Rp13.73 trillion) since the beginning of 2019 until May 17, 2019, due to the uncertainty in global financial markets.
In detail, foreign investors booked a net sell of Rp7.83 trillion on May 17, 2019, which affected the Jakarta Composite Index‘s (JCI) decline of 9.7 percent month to date (MTD). While in the government bond market, foreign investors posted a net sell of Rp5.9 trillion which caused government bond yields to increase by 24.2 bps MTD.
Deputy Commissioner for Public Relation and Strategic Management FSA Anto Prabowo stated the escalation of trade wars between the United States and China has pressured financial markets since early May 2019.
“This condition has resulted in risk-off investors in the financial markets of emerging markets, including Indonesia,” Prabowo said on Wednesday (5/22).
However, the financial services sector is in stable condition with a positive performance in intermediation and risk profile. It’s proven by positive growth of Indonesia economic in the first quarter of this year which giving positive sentiment for financial markets in April 2019.
Also, foreign investors still recorded a net buy of Rp65.24 trillion in all markets from January to April. In the same period, the JCI recorded an increase of 4.21 percent.
Strengthening also occurred in the government bond market, reflected in the net buy on the government market by foreign investors of Rp67.1 trillion and a decline in the government bond yield by 26.54 bps.
On the other hand, the performance of intermediation of financial services institutions is still positive in April 2019. Banking loan grew by 11.05 percent year on year (YoY), driven by growth in investment loan.
Meanwhile, growth in financing receivables was stable at 4.52 percent YoY, amidst moderate growth in multipurpose financing receivables.
In terms of fundraising, banking deposit grew by 6.63 percent YoY, driven by growth in deposits of 7.21 percent YoY.
Meanwhile, during January-April 2019, life insurance and general insurance-reinsurance managed to collect premiums of Rp58.8 trillion and Rp34.2 trillion respectively.
From January to May 17, 2019, the issuer managed to raise funds through the capital market of Rp38.04 trillion, with 9 new issuers.
Banking loan risk is at a low level, reflected in the gross non-performing loan ratio of 2.57 percent. Meanwhile, the ratio of non-performing financing of finance companies was stable at 2.76 percent.
This condition is also supported by the total amount of banking liquid assets which reached Rp1,266 trillion in April 2019.
The capital of financial services institutions is maintained stable at a high level. Banking capital adequacy ratio (CAR) of 23.47 percent. General insurance and life insurance industry Risk-Based Capital (RBC) of 310 percent and 437 percent respectively.
Meanwhile, Financial System Stability Committee which consists of Finance Ministry, Bank Indonesia, and FSA affirmed that the government will maintain the economy in good condition, following the election results rally chaos that killed 7 people, according to the national police report.
The committee held a meeting Thursday (05/23), a day after the big rally, stated they will keep coordinating and synergizing to assure economic condition and financial market conducive.
“Responding to the domestic conditions after the election announcement that lead to various domestic conditions that we need to handle,” said Finance Minister Sri Mulyani Indrawati.
Indrawati regrets the mass chaos following election results. But she saying that the two-day riot didn’t disrupt the financial market and banking industry. According to her, investors have anticipated condition after the General Election Commission announces the election results.
She explained that the government will pay more attention to fiscal, then focus on economic growth in terms of consumption, investment, and export. The Committee assured that it will do what it could do to maintain financial as a strategic sector and important to the economy.
She mentioned about “no compromise” in maintaining financial stability, also from external factor threats, such as the trade war that will impact slowdown export and global economic, also Middle East conflict that gives pressure on oil commodity price.
Bank Indonesia Governor Perry Warjiyo added that external factors have more weight on the Indonesian sluggish market. According to him, it explains more on foreign inflow and outflow portfolio. During the two-day chaos, On May 22, Rp702.92 billion foreign outflows recorded on stocks market. Prior to that day, Rp643.13 billion inflow.
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