Indonesia’s capital market attractive to foreign investors
Foreign investors are starting to put their money back into Indonesian assets as countries around the world begin to ease their COVID-19 restrictions, spurring hopes of a global economic recovery
Employees pass the screen of stock movements in the Indonesia Stock Exchange building in Jakarta (Photo: Antara)Jakarta (VNA) - Foreign investors are starting to put their money back into Indonesian assets as countries around the world begin to ease their COVID-19 restrictions, spurring hopes of a global economic recovery.
Data of the Financial Services Authority showed that foreign investors bought a total of 8 trillion rupiah (564.3 million USD) in Indonesian stocks in May.
The capital inflows boosted the rupiah by 8.7 percent in the past month, reaching 13,877 rupiah per US dollar on June 5. The Jakarta Composite Index (JCI) benchmark stock gauge gained nearly 5 percent within a month.
The 10-year sovereign bond yield also declined significantly to 7.1 percent from 8.02 percent in early May, indicating a decline in risk in investing in the instrument, as bond yields move in the opposite direction of stock prices.
The global market is seeing an abundance of liquidity because central banks in developed countries have been injecting money to support their economies during the COVID-19 risis, BNI Sekuritas economist Damhuri Nasution said.
The relaxing of mobility restrictions is sparking optimism among investors that COVID-19 is under control and that the global economy is starting to emerge back to normal, he added.
Such optimism has sent foreign investors on a buying spree of Indonesian blue-chip banking stocks, driving up the JCI gains.
Damhuri warned that the Indonesian government should keep a close eye on how the relaxation of restrictions could also pose a threat and reverse the positive sentiment in the market.
Bank Indonesia (BI) recorded a current account deficit of 3.9 billion USD, 1.4 percent of the country's gross domestic product (GDP) in the first quarter of this year, down from 2.8 percent in the previous quarter./.
Data of the Financial Services Authority showed that foreign investors bought a total of 8 trillion rupiah (564.3 million USD) in Indonesian stocks in May.
The capital inflows boosted the rupiah by 8.7 percent in the past month, reaching 13,877 rupiah per US dollar on June 5. The Jakarta Composite Index (JCI) benchmark stock gauge gained nearly 5 percent within a month.
The 10-year sovereign bond yield also declined significantly to 7.1 percent from 8.02 percent in early May, indicating a decline in risk in investing in the instrument, as bond yields move in the opposite direction of stock prices.
The global market is seeing an abundance of liquidity because central banks in developed countries have been injecting money to support their economies during the COVID-19 risis, BNI Sekuritas economist Damhuri Nasution said.
The relaxing of mobility restrictions is sparking optimism among investors that COVID-19 is under control and that the global economy is starting to emerge back to normal, he added.
Such optimism has sent foreign investors on a buying spree of Indonesian blue-chip banking stocks, driving up the JCI gains.
Damhuri warned that the Indonesian government should keep a close eye on how the relaxation of restrictions could also pose a threat and reverse the positive sentiment in the market.
Bank Indonesia (BI) recorded a current account deficit of 3.9 billion USD, 1.4 percent of the country's gross domestic product (GDP) in the first quarter of this year, down from 2.8 percent in the previous quarter./.
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