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Jakarta Post

Indonesian bonds attractive amid falling global yields

  • Anton Hermansyah
    Anton Hermansyah

    The Jakarta Post

Jakarta   /   Wed, June 29, 2016   /  08:52 pm
Indonesian bonds attractive amid falling global yields A woman uses an HSBC Indonesia ATM as two people pass by. (Kontan/Baihaki)

UK-based bank HSBC sees Indonesian bonds, both sovereign and corporate, as a good option amid the global yield slump.

Recently, global bond yields have declined due to low inflation in developed countries. Concerns about Britain exiting the EU have even driven the yields on some investment-grade bonds, such as German ones, into negative territory.

"The investment price in Indonesia is very cheap now," HSBC global assets management chief investment officer Denis Gould told in Jakarta on Wednesday, adding that Indonesian bonds offered interesting returns, as the yield was rather flat and less volatile.

The competitive pricing, he further said, was supported by the rupiah exchange rate, which currently was the most undervalued currency in Asian markets after the Indian Rupee.

Gould added that expected inflation in Indonesia at around 5 percent supported the yield around nine to ten percent this year.

An expected tax amnesty is set to increase government revenue thanks to asset repatriation and higher tax income in the coming years. (ags)

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