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Foreign investors withdrawing capital since early this year
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The trading floor of the Indonesia Stock Exchange (IDX) (JP/Wienda Parwitasari)
F
oreign investors have been withdrawing capital from the Indonesian market since early this year in anticipation of an increase in the Federal Reserve fund rate, analysts have said.
This month alone, net sales from foreign investor capital in the bourse reached Rp 4.93 trillion (US$345.1 million), with Rp 13.50 trillion recorded since early January.
A similar trend has occurred in bond market, particularly the government market.
According to Finance Ministry Directorate General of Budget Financing and Risk Management, foreign ownership of government debt papers as of March 7 was recorded at Rp 831.65 trillion, compared with Rp864.73 trillion recorded on Feb. 1.
Foreign ownership of government debt papers in late 2017 was recorded at Rp 836.16 trillion.
Capital Asset Management fund manager Desmon Silitonga said capital withdrawal by foreign investors could not be separated from what was happening in the United States as a speech by Federal Reserve governor Jerome Powell had indicated another increase of the Fed fund rate was likely.
“Foreign investors are trying to adjust their portfolios because of sentiment surrounding the Fed fund rate,” he said as quoted by tribunnews.com.
Desmon believed that foreign investors had relocated their funds to Europe and the US.
Fixed income fund manager Ashmore Asset Management Indonesia analyst Anil Kumar said the sales of foreign investors was unavoidable as the situation was worsened by the weakening rupiah exchange rate against US dollar. (bbn)
