Eastspring Investment Indonesia Bullish on Country's Financial Prospects
Jakarta. Asset manager Eastspring Investment Indonesia, part of UK-based life insurer Prudential, said the country’s financial market will pick up this year following economic improvement fueled by the government’s massive spending and resilient household consumption.
“For the past two years, overall financial markets performance in Indonesia was not really great. [...] It won’t be a [significant] improvement, but we believe there are signs of economic improvement. We’ve seen signs of consolidation and stabilization,” Riki Frindos, Eastspring Investment Indonesia president director, said on Wednesday (03/02).
The government set this year’s economic growth target at 5.3 percent in the state budget, higher than the 5.1 percent median forecast by economists in a Reuters poll and 4.75 percent in 2015 according to the same poll.
The Central Statistics Agency (BPS) is set to announce the data on economic growth in 2015 on Friday.
In a report titled “The Dawn of a New Era” that was released on Wednesday, the asset management firm said that stock markets in Indonesia look “more interesting compared to the bond market” this year.
The benchmark Jakarta Composite Index (JCI) was up by 0.19 percent at 4,596.11 on Wednesday's closing. The index has gone up 0.06 percent so far this year.
Last year, the JCI declined by 12 percent, where mining and agriculture shares led the majority of losses. The market capitalization eroded by 7 percent to Rp 4,873 trillion ($3.54 billion) as of Dec. 30.
Riki also said investors should watch out for near-term risks arising from: the continuation of lower profit trends for Indonesian companies resulting from last year’s weak performance, Indonesia's external funding and the strength of the US dollar against other currencies.
The report noted that the performance of local companies will likely improve due to the easing pressure of inflation. BPS reported in January that Indonesia’s annual inflation in 2015 reached only 3.35 percent, the lowest in five years.
“However, if the rupiah [continues to depreciate], it would [eventually] contribute to [higher] inflation.”
Banking on its bullish outlook, Eastspring, one of Indonesia’s top three asset management firms whose asset value reached Rp 48.81 trillion as of December 2015, plans to introduce new products to its customers this year.
“We will offer something that has not been available before in our product range. We don’t have shariah products nor [do we have those] overseas. We are working on products that will provide diversification to the investors,” Riki said, without naming what products in particular would be made.
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