JAKARTA, NNC - Indonesia's capital market is starting to awaken. Foreign investors are starting to buy up a portfolio of stocks and bonds in Indonesia. This phenomenon is predicted to continue in the 2019 political year.
The issue of trade war between the United States (US) and China has also subsided. Seeing market conditions that show this positive development, Commonwealth Bank recommends equity funds to be the first choice in November for long-term investments.
Throughout the month of October, the Indonesian stock market and bond market experienced a correction. The JCI was corrected -2.42 percent or -8.24 percent year to date (ytd), while the BINDO Index recorded a total return of -6.28 percent ytd.
But on the other hand, the Central Statistics Agency (BPS) recently noted that Indonesia's economy in the third quarter of 2018 grew 5.17 percent year on year (yoy). This figure is higher than the third quarter of 2017 which was 5.06 percent yoy, but still lower than the second quarter of 2018 which amounted to 5.27 percent yoy.
Indonesia also successfully hosted two international scale events, the Asian Para-Games in Jakarta and the annual meetings of International Monetary Fund (IMF)-World Bank (WB) in Bali.
The IMF-WB annual meeting was successfully utilized by the Indonesian government to obtain direct investors to finance infrastructure development projects. Indonesia also succeeded in pocketing an investment agreement of USD13.5 billion for the development of infrastructure projects from the meeting.
Indonesia's trade balance last September also unexpectedly posted a surplus of USD227 billion, when the consensus predicted a deficit. Other positive sentiments came from the issuers' financial statements for the third quarter of 2018 which were recorded positive, the highest since 2011 for one quarter.
At the global level, investors see China's economy as the second largest economic giant in the world, currently slowing down. The Chinese National Bureau of Statistics released data on China's economic growth growing by 6.5 percent yoy in the third quarter of 2018, lower than expected.
On the other hand, positive economic growth in the United States and increasingly tight conditions in the United States labor market have increased the opportunity for the Fed to raise interest rates again at the end of 2018.
"The interest rates hike accompanied by economic growth is generally positive for the stock market so that customers with risk growth profiles can still maintain a share allocation of 70 percent in the portfolio," said Ivan Jaya, Head of Commonwealth Business Wealth & Retail Digital Business.
Customers who have long-term investment plans can take advantage of the development of increasingly positive market conditions. "We recommend equity funds as an option for customers who want to invest for the long term," Ivan added.
To be able to optimize the investment of its customers, Commonwealth Bank also provides wealth management services through the Dynamic Portfolio Model. This service collects a variety of market information and sorts out what is most relevant for each customer based on the risk profile and investment objectives.
This service also provides advice regarding the placement of a customer's asset portfolio. Customers can move their assets dynamically so that they do not have to be equal to the proportion of investment that has been determined earlier.
"Investments will be adjusted not only based on the customer's risk profile, but also future market risks," Ivan concluded.