# Indonesia’s Markets Stand Out as ‘Unusual Haven’ in EM Selloff (Bloomberg)



## Indos

Indonesia’s Markets Stand Out as ‘Unusual Haven’ in EM Selloff​Karl Lester M. Yap
Tue, July 12, 2022 at 3:06 PM·2 min read











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Indonesia’s Markets Stand Out as ‘Unusual Haven’ in EM Selloff​(Bloomberg) -- Indonesia is coming out ahead of emerging-market peers amid the year’s selloff, largely thanks to an unusual mix of global events that have made the country’s assets a potential haven, according to Gavekal Research.
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Improved terms of trade due to high prices for Indonesia’s commodity products is turning the nation into an “unusual haven,” according to Vincent Tsui, Asia analyst at Gavekal Research, who sees continued outperformance, especially in the equity market.

While other emerging markets like India have suffered from the high energy prices brought upon by the war in Ukraine, investors have rewarded Indonesia due to its production of coal and palm oil. Its currency has outperformed most peers in Asia, while the nation’s benchmark stock index has rallied more than 2% this year with most other markets deep in the red.

“Indonesia is benefiting from a powerful terms-of-trade tailwind and from an improving cyclical economic outlook,” Tsui wrote in a note. “In the near term, these factors are likely to allay investors’ concerns, leaving Indonesia as a rare island of relative stability in turbulent emerging market waters.”

Equity earnings for the nation haven’t yet caught up with the improved terms of trade, which will be a catalyst for gains, Tsui wrote. Indonesia’s banks will have to seek more capital due to new regulations, and they could attract foreign inflows given the lenders have “one of the fattest net interest margins” in Asia, he added. Lastly, President Joko Widodo could step up efforts to boost infrastructure to cement his legacy, he wrote.

After almost a decade of current-account deficits, Indonesia is forecast to report an annual surplus equivalent to $58 billion, according to the International Monetary Fund.

“As a commodity exporter, Indonesia is in an enviable position compared to many of its emerging-market peers,” said Frederic Neumann, co-head of Asian economics research at HSBC Holdings Plc in Hong Kong. “Surging global commodity prices, along with robust FDI inflows, have helped to anchor the balance of payments, even as US rates have climbed.”
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Indonesia’s Markets Stand Out as ‘Unusual Haven’ in EM Selloff


(Bloomberg) -- Indonesia is coming out ahead of emerging-market peers amid the year’s selloff, largely thanks to an unusual mix of global events that have made the country’s assets a potential haven, according to Gavekal Research.Most Read from BloombergElon’s OutBiden Administration to Again...




finance.yahoo.com













Indonesia’s Markets Stand Out as ‘Unusual Haven’ in EM Selloff


Indonesia is coming out ahead of emerging-market peers amid the year’s selloff, largely thanks to an unusual mix of global events that have made the country’s assets a potential haven, according to Gavekal Research.




www.bloomberg.com


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## Indos

Has Indonesia shaken its 'fragile' status among emerging markets?​Gayatri Suroyo & Stefanno Sulaiman
/
Reuters

July 04, 2022 07:06 am +08






-A



+A

JAKARTA (July 4): A decade ago Indonesia earned the unwelcome label of being among the so-called "Fragile Five" emerging markets, economies highly vulnerable to capital outflows and a currency slump whenever global interest rates rise.

But fast forward to a new round of monetary tightening led by the U.S. Federal Reserve, Southeast Asia's biggest economy and its capital markets have shown remarkable resilience, throwing a spotlight on whether the situation has fundamentally changed.

Indonesia's central bank is among the world's least hawkish, having given no hint of when it might lift rates, while inflation has only just nudged above the 2%-4% target range and the rupiah is one of emerging Asia's best performing currencies.

This contrasts with 2013, when the Fed's mere mention of plans to taper stimulus triggered destabilising capital outflows that saw the rupiah drop 20%, forcing Bank Indonesia (BI) to hike rates by 175 basis points.

"In Indonesia... there has been no year-to-date increase in the policy rate. Now that's extremely rare," Ivan Tan, ratings agency S&P's financial institutions analyst, told a seminar last week.
Notwithstanding some political risks, Indonesia does appear to be weathering economic conditions better than the others lumped in the Fragile Five - India, Turkey, South Africa and Brazil.

Policymakers say they have learnt lessons from past crises and devised policies such as setting up a domestic non-deliverable forward foreign exchange market, promoting greater use of other currencies in trade and investment rather than the U.S. dollar and selling more bonds to local investors to avoid over-reliance on foreign hot money.

While there is debate about how much these policies have helped, analysts agree record-high exports amid a global commodity boom have helped Indonesia shore up its economic resilience.
"Indonesia benefits as a net commodity exporter ... it is in a very good place to control some of the supply side inflationary pressures that some of the other economies are grappling with," S&P's Tan said.

This has not only helped the resource-rich country book current account surpluses, it also helped the government reduce bond sale targets and fund energy subsidies to shield its 270 million population from high global oil prices.

Moreover, Indonesia's stock market .JKSE is up by more than 5% year-to-date compared with falls in other major Asian equity markets, after having Southeast Asia's busiest IPO schedules last year.

Authorities hope financial market stability will allow the economy to grow by at least 6% per year so Indonesia can achieve a goal of becoming a rich country by 2045, its 100th anniversary since independence. Indonesia's long-term targets also include squeezing more out of its ample resources including minerals such as nickel ore by processing more at home.

BI Governor Perry Warjiyo has said the government's focus on moving up the commodity processing chain would alter the structure of Indonesia's external balance, strengthening capital flows with foreign direct investment while diversifying exports.

"For the whole year, the (current account) deficit will be small and the balance of payments overall will book a surplus. This means fundamentally, foreign exchange supply is high and it will maintain the rupiah exchange rate stability," Warjiyo said at BI's latest policy meeting.
Temporary improvement?​Clouding Indonesia's current outperformance are political risks to some of President Joko Widodo's key reforms and longer-term ambitions to become a rich nation by 2045.
These include a court challenge to his flagship Job Creation law, aimed at cutting red tape and the European Union's objections to Indonesia's nickel export ban.

Questions also remain over whether Indonesia's stability can sustain with the Fed still expected to aggressively raise rates further, commodity prices cooling and global recession risks looming.
"Much of (Indonesia's) improvement seems of temporary nature," Thomas Rookmaaker, head of Asia-Pacific sovereigns at Fitch Ratings, told Reuters.

Fitch, which affirmed Indonesia's investment grade ratings last week, expects BI to hike interest rates by 50 bps this year and another 100 bps in 2023 to limit the rate differential with the United States and avoid a sharp rupiah depreciation, he said.

S&P's Tan also expects pressures in the rupiah this year amid the global monetary tightening.
But some analysts do not see BI in a hurry to hike rates due to low core inflation.
Damhuri Nasution, an economist at BNI Securities, said exports should remain strong for a while, giving BI time to focus on growth and monitor recession risks.

Meanwhile, some foreign investors are backing Indonesia's growth story.

Jupiter Asset Management's head of strategy for global emerging markets Nick Payne is overweight Indonesian equities, and anticipates continued recovery from the pandemic.
"Modest inflation, a good current account position and strong commodity prices, all contribute to the stability of the rupiah during the current difficult global environment," Payne said in e-mailed comments, forecasting a long period of buoyant growth for corporate profits.









Has Indonesia shaken its 'fragile' status among emerging markets?


JAKARTA (July 4): A decade ago Indonesia earned the unwelcome label of being among the so-called "Fragile Five" emerging markets, economies highly vulnerable to capital outflows and a currency slump whenever global interest rates rise.But fast forward to a new round of monetary tightening led by...




www.theedgemarkets.com













Has Indonesia shaken its 'fragile' status among emerging markets?


A decade ago Indonesia earned the unwelcome label of being among the so-called "Fragile Five" emerging markets, economies highly vulnerable to capital outflows and a currency slump whenever global interest rates rise.




www.reuters.com

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## Indos

RATING ACTION COMMENTARY
Fitch Affirms Indonesia at 'BBB'; Outlook Stable​Tue 28 Jun, 2022 - 1:53 AM ET


Fitch Ratings - Hong Kong - 28 Jun 2022: Fitch Ratings has affirmed Indonesia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with a Stable Outlook.
A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS​
*Low Public Debt; Weak Revenue: *Indonesia's rating balances a favourable medium-term growth outlook and a still low government debt/GDP ratio against government revenue, sovereign external debt to GDP and structural features such as governance indicators and GDP per capita that are weak compared with that of 'BBB' category peers.
*Firmer Recovery:* Fitch forecasts Indonesia's GDP growth to recover to 5.6% in 2022 and 5.8% in 2023, as economic activity in the service sector is picking up following a disruptive Delta wave last year, when growth was 3.7%. The recovery is also supported by strong net exports, including the impact of higher commodity prices. Indonesia's exports rose 43% in the 12 months to May 2022 from a year earlier. Still, risks to growth remain given pressure from global inflation and potentially slower growth, including in China, and faster monetary tightening than we currently expect.
*Strong Medium-Term Outlook:* We forecast continued high growth of 5.8% for 2024. Economic activity should receive a boost over the medium term from the implementation of the Omnibus Law on Job Creation, passed end-2020, which aims to alleviate long-standing barriers to investment. Infrastructure spending is also likely to continue beyond the presidential elections, scheduled in February 2024, including on the construction of the new capital, Nusantara, in East Kalimantan.
*High Subsidy Burden: *The government has significantly increased subsidies to shield households from high international oil and food prices, allowing for unchanged domestic prices for the most used types of subsidised fuel. The resulting energy-related subsidy spending, which the government expects to total 2.4% of GDP this year compared with 1.1% in 2021, is to a large extent offset by increased revenue, partly due to higher commodity prices. Indonesia is a net importer of oil, but exports many other commodities, including coal and copper, as well as soft commodities.
*Fiscal Consolidation Likely to Continue:* Fitch forecasts the fiscal deficit to narrow marginally to 4.3% in 2022 from 4.6% in 2021. We assume the government will meet its deficit target of just below 3% of GDP in 2023, when the budget ceiling will be reinstated, although risks to the fiscal outlook have increased and include a further rise in the subsidy bill and weaker GDP growth than we expected.
In our baseline scenario, government debt gradually declines over the next few years after peaking this year at 42.2% of GDP. Indonesia's government debt/GDP ratio compares well with the 'BBB' category median of 55.9%, but the interest/revenue ratio, which we project at 15.8% in 2022, is significantly higher than the 'BBB' category median of 5.9% this year, reflecting its low revenue.
*Monetary Deficit Financing to Decline: *A fiscal deficit below the 3% of GDP ceiling will help end direct monetary financing of the deficit by end-2022, when the emergency law that makes this legally possible expires. The government's large private placements of government bonds with Bank Indonesia (BI) and the central bank's purchases in the primary market since 2020 have helped reduce the government's interest costs but have also raised questions about Indonesia's policy approach over the medium term.
Continued central bank financing would risk fiscal dominance, in our view, and could undermine investor confidence, which would weaken the credit profile.
*Rising, but Contained Inflationary Pressure:* Inflation picked up to 3.6% in May from an average of 1.6% over 2021, but is still within BI's target range of 3% +/- 1pp. We expect inflation to average 3.3% this year, although risks are skewed to the upside. Fiscal policy has been the main instrument of containing price pressure, with monetary tightening limited to increasing reserve ratio requirements to date. We expect this to change, with BI hiking its policy rate by 50bp this year and another 100bp in 2023 to limit the rate differential with the US Fed and avoid a sharp rupiah depreciation.
*Current Account Deficit Likely: *We forecast the current account to turn into a small deficit of 0.4% in 2022, from a surplus of 0.3% of GDP last year, as unchanged subsidised prices will hamper an adjustment in consumer demand for fuel, before widening to 1.0% in 2023, when we assume commodity prices will fall. We expect the basic balance surplus (current account + net FDI) of 1.0% of GDP in 2022 to gradually worsen and turn into a small deficit again in 2024.
*Less Dependence on Foreign Financing:* Around 30% of government debt is denominated in foreign currency, exposing the government to foreign-exchange fluctuations. In addition, the share of non-resident holdings of local-currency government debt fell to 16% of total debt, from 39% in 2019, and is likely to remain at the lower level over the next few years due to the global rise in bond yields.
Foreign-exchange reserves fell by USD9.4 billion to USD135.6 billion in May from end-2021, when they covered 6.7 months of current account payments, more than the 'BBB' median of 5.8 months. Indonesia's external liquidity, measured by the ratio of the country's liquid external assets to its liquid external liabilities, is weaker than peer medians, according to Fitch's calculations.


*ESG - Governance:* Indonesia has an ESG Relevance Score of '5' and '5'[+] for Political Stability and Rights and for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption, respectively. Theses scores reflect the high weight that the World Bank Governance Indicators have in our proprietary Sovereign Rating Model (SRM).
Indonesia has a medium World Bank Governance Indicator ranking at the 47th percentile (BBB peer median: 58th), reflecting a recent track record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a high level of corruption.

RATING SENSITIVITIES​Factors that could, individually or collectively, lead to negative rating action/downgrade:​
- Public Finances: A material increase in the overall public debt burden closer to the level of 'BBB' category peers, for example, resulting from failure to reduce the fiscal deficit to pre-crisis levels or further accumulation of debt by publicly owned entities.
- Macroeconomic: A weakening of the policy framework that could undermine macroeconomic stability, for instance, resulting from continued monetary financing of the deficit in the next few years.
- External Finances: A sustained decline in foreign-exchange reserve buffers, resulting, for example, from outflows stemming from a deterioration in investor confidence or large foreign-exchange interventions.

Factors that could, individually or collectively, lead to positive rating action/upgrade:​
- Public Finances: A marked improvement in the government revenue ratio in the next few years closer to the level of 'BBB' category peers, including from better tax compliance or a broader tax base, which would strengthen public finance flexibility.
- External Finances: A material reduction in external vulnerabilities, for instance, through a sustained increase in foreign-exchange reserves, a further decline in the dependence on portfolio flows or lower exposure to commodity price volatility.
- Structural: Significant improvement of structural indicators, such as governance standards, closer to those of 'BBB' category peers.

SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)​
Fitch's proprietary SRM assigns Indonesia a score equivalent to a rating of 'BBB-' on the Long-Term Foreign-Currency (LT FC) IDR scale.
Fitch's sovereign rating committee adjusted the output from the SRM to arrive at the final LT FC IDR by applying its QO, relative to SRM data and output, as follows:


- Macro: +1 notch adjustment to offset the deterioration in the SRM output driven by the pandemic shock, in particular from the growth volatility variable. Fitch believes that Indonesia has the capacity to absorb the shock without lasting effects on medium-term macroeconomic stability.


Fitch's SRM is the agency's proprietary multiple regression rating model that employs 18 variables based on three-year centred averages, including one year of forecasts, to produce a score equivalent to a LT FC IDR. Fitch's QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.

BEST/WORST CASE RATING SCENARIO​

International scale credit ratings of Sovereigns, Public Finance and Infrastructure issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of three notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.



REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING​The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG CONSIDERATIONS​

Indonesia has an ESG Relevance Score of '5' for Political Stability and Rights as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and a key rating driver with a high weight. As Indonesia has a percentile rank below 50 for the respective governance indicator, this has a negative impact on the credit profile.

Indonesia has an ESG Relevance Score of '5'[+] for Rule of Law, Institutional & Regulatory Quality and Control of Corruption as World Bank Governance Indicators have the highest weight in Fitch's SRM and are therefore highly relevant to the rating and are a key rating driver with a high weight. As Indonesia has a percentile rank above 50 for the respective governance indicator, this has a positive impact on the credit profile.

Indonesia has an ESG Relevance Score of '4'[+] for Human Rights and Political Freedoms as the Voice and Accountability pillar of the World Bank Governance Indicators is relevant to the rating and a rating driver. As Indonesia has a percentile rank above 50 for the respective governance indicator, this has a positive impact on the credit profile.

Indonesia has an ESG Relevance Score of '4' for Creditor Rights as willingness to service and repay debt is relevant to the rating and is a rating driver for Indonesia, as for all sovereigns. As Indonesia had a fairly recent restructuring of public debt in 2005, this has a negative impact on the credit profile.

Except for the matters discussed above, the highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or to the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.



https://www.fitchratings.com/research/sovereigns/fitch-affirms-indonesia-at-bbb-outlook-stable-28-06-2022


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## Indos

Indonesia’s Rupiah Seen Rising to One-Year High as Funds Return​

High bond yields, rate hikes to boost rupiah: TD Securities
Rupiah has strengthened more than 2% from low set last month
By
Matthew Burgess
August 10, 2022 at 8:45 PM PDT

Indonesia’s rupiah will advance to the strongest level in almost a year as the country’s trade surplus and attractive yields lure overseas investors to local stocks and bonds, according to TD Securities.

The currency will appreciate to 14,057 per dollar in the next three months, matching the high set in October 2021, said Mitul Kotecha, head of emerging-market strategy at the company in Singapore. Attractive bond yields, rising palm oil exports to China, improving terms of trade and the prospect of interest-rate hikes should all support the currency, he said










Indonesia’s Rupiah Seen Rising to One-Year High as Funds Return


Indonesia’s rupiah will advance to the strongest level in almost a year as the country’s trade surplus and attractive yields lure overseas investors to local stocks and bonds, according to TD Securities.




www.bloomberg.com


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## Indos

Malaysia, Indonesia bonds to outpace peers on growth boost​







Thursday, August 18th, 2022 at Economy | News | World


*RETURNS* from Indonesian and Malaysian bonds may continue to outpace regional peers on the back of higher economic growth and lower price pressures in those countries as stagflation risk looms globally. 

Indonesia bonds have outperformed South-East Asian (SEA) peers so far this year, losing just 2.9%, while an index of US Treasuries tumbled by nearly 9% over the same period. Total losses of 6.5% from Malaysian debt have been better than those on Thai and Philippine bonds, which have set investors back by at least 10%.

Natwest Group Plc is among those betting that being in an economic sweet spot will lure global emerging-market investors to these markets. Indonesia and Malaysia’s second-quarter GDP rose by 5.4% and 8.9% respectively, from the year before, topping estimates compared to Philippine and Thai growth that missed forecasts.

“If developed markets see stagflation risk becoming more entrenched, we may see increased allocations toward economies with good fundamentals instead,” said Galvin Chia, an EM currency strategist at Natwest Markets in Singapore. “Growth leaders in SEA such as Indonesia and Malaysia could benefit.”

In emerging-markets, better growth is good for bonds as improving macro-economic conditions will lure in global investors. Shorter yields, which are more sensitive to domestic rate expectations, have jumped in the Philippines and Thailand relative to a smaller uptick in Indonesia and Malaysia.

Malaysia’s headline inflation is only 0.4% above a long-term average of 3%, while in Indonesia, it’s at 4.9%, higher than the central bank’s 2%-4% target. Malaysia releases July inflation figures on Aug 26.

Meanwhile, Thailand and the Philippines are seeing surging price pressures, hitting 7.6% in July in the former, near a 14-year high and considerably above the central bank’s target range of 1%-3%.

Part of the reason behind more muted inflation in Indonesia and Malaysia are the government’s fuel subsidies. Nonetheless, both nations have managed to keep their fiscal deficits in check, mainly due to the windfall from commodity exports.

Malaysia is forecast to meet its fiscal deficit target of 6% of GDP this year. At the same time, Indonesia announced this week that it is targeting a 2023 fiscal gap of 2.85% of GDP, back below the 3% target abandoned during the Covid-19 crisis. — _Bloomberg / pic HUSSIEN SHAHARUDDIN



https://themalaysianreserve.com/2022/08/18/malaysia-indonesia-bonds-to-outpace-peers-on-growth-boost/


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## Indos

Indonesia a surprise winner as emerging markets crumble​





Saturday, August 27th, 2022 at Opinion

*by SHULI REN (Bloomberg Opinion) / Pic by Bloomberg*

CALL it a taper tantrum, times 10. Developing nations are reeling from the double whammy of US Federal Reserve (Fed) interest-rate hikes and China’s economic slowdown. 

They are burning through foreign reserves at the fastest pace since 2008 to defend their currencies and cover higher import bills for food and fuel. Foreign investors are heading for the exits, while frontier economies such as Sri Lanka and Bangladesh have sought bailouts from the International Monetary Fund (IMF). The picture is not pretty.


Amid the chaos is a surprise winner. Indonesia, which was singled out as a Fragile Five less than a decade ago for its vulnerable currency and reliance on hot foreign money, has been a haven of relative calm.

The rupiah, down only 3.8%, is the third best-performing Asian currency this year. It’s all the more remarkable considering Bank Indonesia has resisted following the Fed and only began raising interest rates this week, by a modest 25 basis points.

Its stock market is another winner. The iShares MSCI Indonesia ETF is up 5.6% this year, beating the S&P 500 Index’s 13.1% drop. As a result, even though foreigners have been selling holdings of government bonds, robust equity demand has helped stabilise Indonesia’s portfolio flows.






When global markets get turbulent, investors flee from countries with the so-called twin deficits — the current account and fiscal balance. Indonesia has been fairly immune, because it’s making progress on both fronts.

President Joko Widodo _(picture)_ should send Russia’s Vladimir Putin a thank you card. The conflict in Ukraine has pushed up prices of palm oil and coal, which Indonesia exports. 

These two commodities alone improved the country’s current account by 2.4% of its GDP since 2019, with one-third coming from palm oil and the rest from elevated coal prices, according to HSBC Holdings plc. Indonesia now has a solid current-account surplus for the first time since 2011.

Like everywhere else, in the last two years, Jakarta spent plenty to counter pandemic-induced slowdowns. But Jokowi, as the president is known, vowed to bring his budget back in order. Earlier this week, the government pledged to return its 2023 fiscal deficit to the goal of 3% of GDP .

Jakarta will reduce its fuel subsidies, which amount to as much as 2.7% of its GDP this year. The price of the most- consumed gasoline has been fixed at 7,650 rupiah (RM2.32) per litre since 2019, or about 40% below the current market price, said Malayan Banking Bhd economist Lee Ju Ye.

But Indonesia wants to be seen as far more than just a source of commodities — at least this is not Jokowi’s preferred narrative. After all, one can point to Chile, the Saudi Arabia of lithium, a key ingredient of electric-vehicle (EV) batteries. Chile somehow has not managed to capture the epic switch to EVs and is benefitting from IMF help.

Jokowi is keen to build up an entire EV manufacturing industry at home, rather than being a mere exporter of nickel, another essential ingredient to EV batteries. In a recent interview with _Bloomberg News_, he confirmed that Indonesia may impose an export tax on nickel this year as an incentive to entice global manufacturers to open EV factories there. Jokowi even wants Tesla Inc to make cars locally.

So far, plenty of manufacturers are responding. In April, South Korea’s LG Energy Solution Ltd, the world’s second- largest battery maker, signed a US$9 billion (RM40.11 billion) deal to build a mines-to-manufacturing supply chain. Meanwhile, China’s Contemporary Amperex Technology Co Ltd, the world’s largest, is building production lines in a near US$6 billion deal.






Jakarta has cut off commodity supplies in the past — a temporary palm oil ban in the spring for instance — so it’s smart for foreign companies to place factories close to the resources and heed policy priorities. After all, Indonesia has more than 20% of the world’s nickel reserves .

None of the EV manufacturers’ pledges is reflected in economic statistics yet; building factories takes time. But they nonetheless stoke asset managers’ confidence that Indonesia will see robust foreign direct investments, which are more stable than portfolio flows, and that perhaps manufacturing, whose 20% share of the economic pie has barely budged over the past decade, could give a boost to its commodity-fueled economic growth.

The Russia-Ukraine conflict has prompted a shift in global economic power to resource-rich countries. However, having prized metals reserves is not enough. 

The government needs to know better than to squander its riches and know how to leverage its power to move up the value chain. Jokowi has done very well for Indonesia, even before his vision turns into reality. — *Bloomberg/Pic by Bloomberg*

_


https://themalaysianreserve.com/2022/08/27/indonesia-a-surprise-winner-as-emerging-markets-crumble/


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## Indos

Robeco Seeks Shelter in Brazil, Indonesia Amid Global Stock Pain​
Daniela Da Costa-Bulthuis says Indonesia offers stability
Money manager likes Brazil utilities, infrastructure stocks






By
Mariana Durao and
Vinicius Andrade
October 25, 2022 at 22:15 GMT+7


(Bloomberg) -- Equity investors bracing for a global economic downturn should seek shelter in developing nations like Brazil and Indonesia, according to Robeco Institutional Asset Management BV.

The Dutch firm, which oversees 200 billion euros ($199 billion) in assets, says the two emerging countries should offer stability and good returns in a time when global stocks are getting hit by weak economic prospects. The MSCI Inc.’s index of global stocks is down 23% this year while Brazil and Indonesia’s stock gauges are up 10% and 4%, respectively, in dollar terms.

“Traders got used to dump emerging-market equities and pile into developed nations at flight-to-quality times, but that has been changing,” said Daniela Da Costa-Bulthuis, a portfolio manager at Robeco. “The fact that central banks in developing nations -- Brazil included -- got much ahead of their counterparts in the US and Europe is crucial amid all the market volatility.”

Da Costa-Bulthuis’s $1.3 billion Global SDG Engagement Equities fund, which she oversees along with Peter Van Der Werf and Michiel Plakman, is down about 26% over the past year, compared to a 23% drop for the MSCI ACWI Index. Robeco is overweight Brazil and Indonesian stocks within its emerging-market strategies since the start of the year.

Brazilian stocks will likely get a boost from increased demand for the commodities it produces, while valuations remain attractive, according to Da Costa-Bulthuis. The Ibovespa index trades at 6.9 times forward earnings, compared to the 10-year historical average of 11.5 times, Bloomberg data show. 

Robeco’s money manager is not concerned about the outcome of Sunday’s presidential runoff vote and its market impact. She believes former President Luiz Inacio Lula da Silva won’t get congressional approval for radical policies if elected, while President Jair Bolsonaro will likely stick to his current economic agenda if he wins. 

“It’s the congress that calls the shots,” said Da Costa-Bulthuis. “There’s no room for extremist measures, and Lula’s picks so far show some moderation.”

Investors from Franklin Templeton to UBS Global Wealth Management expect Brazilian stocks to keep outperforming its emerging-market peers. Da Costa-Bulthuis said she would likely buy more Brazilian stocks if the next president shows signs of fiscal responsibility. She likes sectors including infrastructure and utilities.

Indonesia’s stocks, in the meantime, will likely benefit from elevated commodity prices, as the nation is a raw-material exporter, and strong growth. The Asian economy is expected to grow 5.2% this year, compared to a 3.0% average for emerging nations, according to Bloomberg surveys.

After ranking among institutional investors that warned about the impact of Brazil failing to protect its forests, Da Costa-Bulthuis says the country must urgently act to combat deforestation, protect indigenous groups and strengthen regulatory agencies. No matter who wins the Sunday vote, Brazil seems well-positioned to lure more investments from US and European investors, she says. 

Brazil and Indonesia are currently “islands of stability in a turbulent world,” she said.

©2022 Bloomberg L.P.









Robeco Seeks Shelter in Brazil, Indonesia Amid Global Stock Pain


Equity investors bracing for a global economic downturn should seek shelter in developing nations like Brazil and Indonesia, according to Robeco Institutional Asset Management BV.




www.bloomberg.com













Robeco Seeks Shelter in Brazil, Indonesia Amid Global Stock Pain - BNN Bloomberg


Equity investors bracing for a global economic downturn should seek shelter in developing nations like Brazil and Indonesia, according to Robeco Institutional Asset Management BV.




www.bnnbloomberg.ca


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## Indos

China’s Investment in Indonesia up by 100% From Last Year​by Indonesia ExpatOctober 26, 2022






*China’s investment in Indonesia in the first half of 2022 skyrocketed over 100 percent in comparison to the same period last year, due to financing 1,020 projects, including factory construction.*​
Based on the Investment Ministry/Investment Coordinating Agency’s data, China’s investment in January-June 2022 reached US$3.6 billion. This amount is more than double the first half of 2021, which was US$1.7 billion.

“*I have confidence that Indonesia is still an investment choice, especially downstream,*” said Investment Minister Bahlil Lahadalia in a press conference broadcast live on YouTube. “China really encourages downstream investment. Although there is a slowdown in China, investment here will be fine.”

*Lahadalia said foreign investment into Indonesia in the third quarter of 2022 reached Rp168.9 trillion, growing 63.6 percent over the same period last year.*

“*This is the largest in history. It’s extraordinary,*” he added.

Senior economist and Executive Director of the Institute for Development of Economics and Finance (INDEF) Tauhid Ahmad explained that the increase in the value of Chinese investment was partly triggered by the government’s downstream policy.

*“China boosts TKDN (domestic content level) thus, China is building many factories here,”* he noted.

Moreover, China’s market has been somewhat limited due to the COVID-19 pandemic lockdown, resulting in the country’s expansion outwards. Indonesia is a big market for China, with economic growth of 4 percent this year, which drives the potential to expand outside the country after the past decade’s import policies.

The Investment Ministry/Investment Coordinating Agency’s data also shows that the highest realised value of direct foreign investment (PMA) occurred in 2020, which reached US$4.84 billion with a total of 3,027 projects.

With China’s investment value in the first half of this year, Ahmad estimates the investment value in 2022 could reach more than US$7 billion. China is the second largest investor in Indonesia after Singapore, which in the first half of 2022 invested US$6.7 billion.

Padjadjaran University economist Yayan Satyakti added that China is more comfortable partnering with the Asian market than the Western system, namely Europe and the United States.

“China’s geopolitical orientation shift will create a new atmosphere considering the conditions of the Ukraine-Russia war and the case of the trade war with the United States. China will restructure geopolitics and the economy into a stronger pole,” Satyakti told _BenarNews_.

President Joko Widodo has encouraged companies to process commodities domestically to double the value of Indonesia’s exports, as well as create jobs and help the country take a bigger role in global supply chains.

As the world’s main nickel producer, a policy to ban the export of nickel ore in 2020 has prompted the European Union to file a lawsuit with the World Trade Organisation (WTO) asking the Indonesian government to review its policies.

However, Coordinating Minister for Maritime Affairs and Investment Luhut Pandjaitan noted that Indonesia’s exports could reach a record US$280 billion this year, as nickel-based steel sales increased significantly after the government banned nickel ore exports.

Pandjaitan told *Reuters *on Monday 24th October 2022 that exports, in general, could increase by more than US$300 billion by 2024 as the government prepares to regulate exports of other commodities, such as copper, bauxite, and tin.









China’s Investment in Indonesia up by 100% From Last Year


China’s investment in Indonesia in the first half of 2022 skyrocketed over 100 percent in comparison to the same period last year, due to financing 1,020 proj




indonesiaexpat.id


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## Indos

Both stock market and Rupiah, Indonesian currency, are still strong enough to fight the pressure amid The Fed aggressive tightening policy.


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## Indos

After last night (Indonesian time) The Fed raised interest rate 75 basis point, Indonesia stock market can still be in green zone, alhamduliLLAH.


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## Indos

The analysts gives Indonesia as the bright spot amid gloomy condition in world economy. The reporting tone in Indonesia is positive and the nation get good highlight.


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## Indos

AlhamduliLLAH. Indonesia central bank stated that until the end of 2022, the Central Bank will likely get around 840 million USD surplus for its 2022 budget.

Source :









Rupiah Babak Belur, BI Malah Cetak Surplus Rp 13,2 Triliun


Gubernur Bank Indonesia (BI) Perry Warjiyo mengungkapkan, Anggaran Tahunan Bank Indonesia (ATBI) pada 2022 akan mencatatkan surplus.




www.cnbcindonesia.com


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## Indos

Stock Exchange Capitalization Reaches Rp9,400 trillion, the Highest in ASEAN​





Lorenzo Anugrah Mahardhika - Bisnis.com 24 November 2022 | 19:30 WIB



*Bisnis.com*, JAKARTA – The Indonesian capital market recorded a positive performance throughout 2022. A number of these achievements have led Indonesia to become one of the best exchanges in the Southeast Asian region and even the world.

President Director of the Indonesia Stock Exchange (IDX) Iman Rachman said that entering the third year of the coronavirus pandemic, Indonesia's capital market recorded positive growth.

This is in line with the policy mix taken by regulators, including Bank Indonesia, the Deposit Insurance Corporation (LPS), to the Financial Services Authority (OJK).

Iman explained that in the current year, the Composite Stock Price Index (JCI) still recorded positive growth of 6.82 percent to the level of 7,030 until November 22, 2022. This record makes Indonesia the 3rd best performing exchange in the world throughout the current year.

"If we compare, the Indonesian stock exchange is only below Chile and Turkey," he explained when giving a keynote speech at the CEO Networking event, Thursday (24/11/2022).

Meanwhile, in terms of market cap, the Indonesian stock exchange has reached around Rp9,400 trillion or around US$ 630 billion. This number brings the Indonesian stock exchange to become the market with the largest capitalization in the Southeast Asian region.

Meanwhile, the average daily transaction value on the Indonesian stock exchange has also reached Rp14.9 trillion or around US$ 1 billion. This number is only inferior to Thailand in the Asean region which posts daily transactions of US$ 2 billion per day.

He said Thailand's daily transaction value was achieved with a smaller number of investors compared to Indonesia. According to Iman, this happened because of market deepening carried out by the local stock exchange authority

In addition, Iman also explained that the number of Indonesian capital market investors has reached 10 million. This should be appreciated considering that 5 years ago the number of new Indonesian capital market investors amounted to 1.2 million investors.

"During the pandemic in the last 3 years, the number ofinvestorshas grown by 2 million per year. But also keep in mind that these 10 million investors are only 1.5 percent of Indonesia's total population of 270 million people," he explained.

Furthermore, 70 percent of the current stock transaction value is dominated by domestic investors, while the rest is filled by foreign fund owners. This trend is inversely proportional to the value of stock transactions 5 years ago, where 70 percent of them were dominated by foreigners and the rest were local investors.

"From the record, 45 percent of the value of the stock transaction came from retail investors," he added.

Meanwhile, the number of issuers listed on the IDX has reached 820 companies, with 54 new companies listed in 2022. This number is getting closer to the IDX target in 2022, which is 55 new listed companies.

However, Iman projects that the number of new listed companies by the end of 2022 will be in the range of 58 to 60 companies. Meanwhile, the number of companies in the IDX pipeline to list initial shares is 41 prospective issuers.









Kapitalisasi Bursa Tembus Rp9.400 triliun, Paling Tinggi Se-ASEAN


Pasar modal Indonesia mencatatkan kinerja positif sepanjang tahun 2022. Sejumlah capaian ini membawa Indonesia menjadi salah satu bursa terbaik di wilayah ASEAN




market.bisnis.com


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## Indos

Indonesia to use excess budget cash to rein in 2023 borrowing​





JAKARTA, Nov 27 (Reuters): Indonesia will accumulate excess cash in this year's budget and use it to help reduce borrowing in 2023, when it expects to face market volatility and a weakening global economy, its finance minister had announced.

South-East Asia's largest economy has managed a strong fiscal position this year, as tax revenues got a boost from booming exports - powered by high commodity prices - and a post-pandemic recovery in economic activity.

As of the end of October, the government had collected excess cash of 270.4 trillion rupiah ($17.26 billion), although its overall budget was in a deficit of 169.5 trillion rupiah, or 0.91% of GDP.

Finance ministry officials have said the 2022 fiscal deficit could be near 3% of GDP.

"We will accumulate quite significant excess cash," Sri Mulyani Indrawati told a news conference.

"In 2023, there may be volatility," she warned, adding that maintaining a cash buffer would help the government to minimise its risks.

Next year, the government is targeting a budget deficit of 2.8% of GDP, assuming economic growth of 5.3%, compared with a forecast range of 5% to 5.3% for 2022.

The central bank this week, however, said that 2023 GDP growth may slow to 4.37%.

Market volatility, driven by geopolitical tensions and monetary tightening in many major economies, has hit Indonesia's sovereign bond market in recent months.

Sri Mulyani said the government would reduce its sales target at regular bond auctions in the fourth quarter and optimise raising funds through retail bond sales and loans from multilateral institutions.

Another source of cash would be the planned sale of 128.6 trillion rupiah worth of bonds to the central bank in December, the minister said.

Bank Indonesia Governor Perry Warjiyo said on Wednesday that the central bank would use its bond market operations to ensure that bond yields do not rise excessively next year.









Indonesia to use excess budget cash to rein in 2023 borrowing


Indonesia will accumulate excess cash in this year's budget and use it to help reduce borrowing in 2023, when it expects to face market volatility and a weakening global economy, its finance minister had announced.




www.thestar.com.my


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## Indos

Indonesian Capital Market Ends 2022 on High Note: OJK​BY :JAYANTY NADA SHOFA
JANUARY 02, 2023

*Jakarta. *The Financial Services Authority or OJK recently announced that the Indonesian capital market wrapped up 2022 on a high note, doing much better than other markets such as Europe and other ASEAN economies.

OJK chairman Mahendra Siregar cited media reports that the European stock market has just had a brutal year marked by the Russia-Ukraine. European stocks also logged their worst annual performance since 2018. This struck a huge contrast to what is happening in Indonesia.

“We should be grateful. Amid the uncertainty in Europe and globally, Indonesia’s economy and capital market were resilient. and recorded a very positive performance in 2022. We are even doing the best in ASEAN and Asia in general,” Mahendra said when kicking off the country’s first trading day of 2023 on Monday.

According to Mahendra, the IDX Composite —an index encompassing all stocks listed on the Indonesian exchange— climbed 4 percent in 2022, compared to the previous year. The exchange posted 1.31 million transactions daily — the largest in ASEAN. 

The Indonesian Stock Exchange last year saw its market cap rising 15 percent to $600 billion or equivalent to 50 percent of the national gross domestic product (GDP). There were also 59 initial public offers (IPO) in 2022, among others, tech giant GoTo and travel booking platform Blibli. 

*Read More:*


*GoTo Announces $1.26b IPO in Indonesia*
*Global Digital Niaga Lists Blibli on IDX*
*Finance Minister Confident Indonesia to Remain Bright Spot in Global Economy*
The number of investors trading at the Indonesian capital market topped 10.3 million in 2022, marking a tenfold increase from the 2017 figures. Domestic investors account for 55 percent of the total investors in Indonesia. OJK revealed 58.7 percent of the total investors in Indonesia were millennials and Gen Z.

"Going forward, we have to prioritize improving our integrity, accountability, and credibility. By doing so, we will be able to 'fill the empty glass' because 10.3 million investors is merely 4 percent of our population. [...] We are also still falling behind other ASEAN economies, whose market cap has topped a hundred percent [of their GDP],” Mahendra said.

For reference, the World Bank data showed that Indonesia was home to about 273.7 million people as of 2021.

"There is no such thing as 'wait and see' when it comes to investing in Indonesia. It is all about investment, investment, and investment," Mahendra said.









Indonesian Capital Market Ends 2022 on High Note: OJK


IDX Composite climbed 4 percent in 2022 compared to the previous year.




jakartaglobe.id


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## Indos

At the Beginning of 2023, Foreign Capital Inflows of IDR 8.05 Trillion​1 hour ago

*KONTAN.CO.ID - JAKARTA.* There is foreign capital inflows to domestic financial markets in early 2023.

Based on transaction data compiled by Bank Indonesia (BI) for the period 2nd January 2023 to 5th January 2023, non-resident investors booked a net buy totalling Rp 8.05 trillion.

Executive Director, Head of Communication Department of BI Erwin Haryono revealed that foreign capital flows were monitored in the government securities (SBN) market, but foreign investors exited the stock market.

*Also Read: Foreign Funds Roll Out New Portfolio Rotation to East Asia*

"Non-residents bought a net of IDR 9.74 trillion in the SBN market but sold a net of IDR 1.68 trillion in the stock market," Erwin wrote in his statement, Friday (6/1).

In line with the influx of foreign capital into domestic financial markets, investment risks in Indonesia have been observed to decrease.

This can be seen from Indonesia's 5-year credit default swap (CDS) premium, which fell to 95.01bps on 5th January 2023 from 101.23bps on 30th December 2023.

Consequently, based on settlement data from early 2023 to 5th January 2023, non-residents bought a net of Rp 6.68 trillion in the SBN market and a net sell totaling Rp 2.91 trillion in the stock market.



Awal Tahun 2023, Arus Modal Asing Masuk Rp 8,05 Triliun


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## Indos

Indonesia's budget deficit narrows sharply amid strong revenues​

Credit: REUTERS/BEAWIHARTA
December 20, 2022 — 04:32 am EST

Written by Gayatri Suroyo, Fransiska Nangoy, Bernadette Christina Munthe for Reuters ->
Adds minister's quote, comments by analysts

JAKARTA, Dec 20 (Reuters) - Indonesia's fiscal deficit as of Dec. 14 was equal to 1.22% of gross domestic product, much smaller than the latest government outlook, the finance minister said on Tuesday, amid strong revenue collection and good budget discipline.

The data was hailed by some analysts as good fiscal management, after the government recorded large deficits in 2021 and 2020 to help Southeast Asia's largest economy navigate the impact of the COVID-19 pandemic.

Indonesia booked a fiscal deficit of 237.7 trillion rupiah ($15.24 billion)or 1.22% of GDP as of mid-December, Sri Mulyani Indrawati told an online news conference.

That was much narrower than the revised budget deficit for full-year 2022 of 4.5% of GDP and officials' latest guidance of a deficit of around 3% this year.

Last year's fiscal deficit was 4.6%, while 2020's was 6.1%.

"The deficit was much smaller than what we planned for," Sri Mulyani said, without providing a full-year estimate.

"This shows that our budget has become healthier."

Total revenue in the same period was 2,479.9 trillion rupiah, up 37% from last year and higher than the target for 2022, boosted by high commodity prices, economic recovery from the pandemic and a hike in the value added tax (VAT) rate.

Total spending amounted to 2,717.6 trillion rupiah, up 12% from 2021, but representing just 87.5% of the year's budget.

Spending is expected to rise in the last few days of 2022, with some fuel subsidies and bills for projects like construction for the planned new capital city yet to be paid, said the ministry's director general of budget Isa Rachmatarwata.

The government had excess cash of 232.2 trillion rupiah as of Dec. 14. Officials have previously said this could be carried over to next year to lower the 2023 bond sale target.

Fakhrul Fulvian, an economist with brokerage Trimegah Sekuritas in Jakarta, said the small deficit reflected a commitment for fiscal discipline.

Handy Yunianto, head of fixed income at Mandiri Sekuritas, said: "This should be positive for the bond market and sovereign ratings".



https://www.nasdaq.com/articles/indonesias-budget-deficit-narrows-sharply-amid-strong-revenues


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## Indos

Indonesia raises $3 bln in U.S. dollar bonds - term sheet​

SYDNEY, Jan 5 (Reuters) - Indonesia has raised $3 billion in a U.S. dollar bond issuance, according to a term sheet seen by Reuters on Thursday.

The government issued the bonds in five, 10 and 30 year tranches which raised $1 billion, $1.25 billion and $750 million respectively, the term sheet showed.

Indonesia's finance ministry debt department did not respond to a request for comment from Reuters.

There were final orders worth $3.6 billion for the five year bond, $4.7 billion for the 10 year and $6.15 billion for the longest dated tranche, details from one of the banks working on the deal showed.

Final yields were set at 4.8% for the five year, 5.1% for 10 years and 5.75% for the 30 year bond.

(Reporting by Scott Murdoch in Sydney and Gayatri Suroyo in Jakarta; Editing by Christopher Cushing)



https://www.nasdaq.com/articles/indonesia-raises-$3-bln-in-u.s.-dollar-bonds-term-sheet


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