JAKARTA (TheInsiderStories) – Asset under management (AUM) of mutual fund managers in Indonesia reached Rp552.28 trillion (US$39 billion) in 2020, up 3.8 percent from prior year amounting to Rp532.13 trillion, according to Infovesta Utama data. The amount jumped by 20 percent compared to 2019 worth of Rp461.29 trillion.
The data showed, protected mutual funds reached Rp137.40 trillion or rose by 13.87 percent from a year ago. Then, fixed income mutual funds jumped 11.71 percent to Rp126.61 trillion, Rp126 trillion for equity funds or increased 13.87 percent compared to 2019, and money market mutual funds up 7.55 percent to Rp92.55 trillion,
Then, mixed mutual funds Rp26.27 trillion, Real Estate Investment Funds (REITs) and asset-backed securities (ABS) collective investment contracts of Rp17.87 trillion, exchange traded funds amounting to Rp16.17 trillion, and the index mutual fund around Rp9.40 trillion. However, equity mutual AUM was declined by 7.74 percent, mixed mutual funds contracted 12.69 percent, protected AUM minus 2.97 percent, and DIRE and ABS dropped 7.74 percent.
Head of research at Infovesta, Wawan Hendrayana, assessed that the pandemic is a blessing for several investment manager firms and custodian banks. Amid the pandemic, he added, there were new subscriptions in the last quarter of 2020.
The mutual funds in US Dollar denominations also shot up over the past year by 32.81 percent to Rp2.96 trillion, consist of equity funds of Rp965.61 billion, money market funds Rp138.82 billion, mutual and mixed funds Rp36.43 billion, fixed income funds Rp1.02 trillion, protected mutual funds Rp560. 47 billion, and REITs and ABS amounting to Rp239.45 billion.
In 2020, the Financial Services Authority (FSA) fundraising in the capital market only reach Rp118.70 trillion from 53 issuers, less than the initial target of Rp160 trillion due to the impact of the pandemic. Chief executive at the agency, Hoesen, said for this year, he confident the fundraising amount could be rebound to around Rp160 trillion.
While, global investment bank, Morgan Stanley, assesses that the Indonesian stock market deserves to be looked at by global investors again after a large number of net sells occurred this year due to the COVID-19 pandemic. During the ‘Goldilock’ period, said the agency, Indonesia became one country that entered that period which benefited from the policies of the United States (US) Federal Reserves and the availability of the vaccine.
Asian economist at Morgan Stanley, Deyi Tan, said the goldilocks period was a combination of accelerated growth on the tram, rising inflation and massive policy easing. In terms of banking and stock investment strategy, Indonesia’ economic growth will occur by increasing investment credit in the next first to second quarter.
“We expect the direct beneficiaries of the Omnibus Law to be property/industrial estates, technology, labor-intensive industries, such as textiles/tobacco and infrastructure. Banks will benefit indirectly as investors from this growth,” said Tan.
Another positive sentiment on the Indonesian stock market is that the commodity market has shifted from the coal trend to nickel. Indonesia benefits from being the largest nickel producer in the world. So far, coal exports have been the main contributor to Indonesia’ growth, especially during the commodity super-cycle period in 2010 – 2013.
But unfortunately this period has experienced a slowdown, as many countries around the world pushed for a reduction in carbon use in their economies. However, nickel has the potential to drive new growth in the commodity segment.
In addition, said Tan, the MSCI Indonesia index year to date has fallen 26 percent, while the Jakarta Composite Index has fallen 22 percent. While, foreign net sell reached $4.1 billion year to date, four times bigger than the full year 2019 position which was valued at $1.1 billion. This value practically negates the net buy that has occurred since 2007.
Foreign ownership of Indonesia’ major shares has simultaneously decreased by 26 point since 2017. In line with the improvement in consumption as indicated by the consumption of cement and four-wheeled vehicles and the improvement in the Purchasing Managers Index, Morgan Stanley targets the JCI to be in the position of 5,909 in June 2021.
The target is based on earnings per share of Rp426 in 2021 and Rp490 in 2022 with a target price to earnings ratio of 12.9 times. In addition, there are several conditions that need to be considered from these targets, such as stagnant implementation of the Omnibus Law due to incomplete derivative regulations.
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