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Indonesia pension fund assets fell 3.61% in January-April as stocks plunge

Indonesian rupiah notes
By Asia Asset Management  
June 23, 2020

Indonesia’s pension fund industry assets fell 3.61% in January through April as equity assets plunged over 30% on foreign selling of domestic stocks amid the coronavirus crisis.

The Southeast Asian country’s pension fund industry had 272.4 trillion rupiah (US$19.32 billion) of assets as of end-April, down from 282.6 trillion rupiah at the end of 2019, according to figures published on the website of the Financial Services Authority of Indonesia.

The regulator typically posts the data without providing analysis.

The pension industry’s equity assets dived 30.16% to 21.3 trillion rupiah over the four months from 30.5 trillion rupiah in December, a period in which the benchmark Jakarta Composite Index declined 25.13%.

According to Will Malcolm, portfolio manager for emerging-market and Asia Pacific equity strategies at Aviva Investors, the stock market weakness was largely driven by foreign selling.

“It took less than four months of the [gross] outflow total to equal the entire annual [gross] outflow in 2019, reflecting an exodus of offshore capital in response to the coronavirus pandemic,” Mr. Malcolm tells Asia Asset Management.

Reuters reported on April 1 that in March alone, foreign investors sold a net $33.3 billion worth of regional stocks, the highest since January 2008, including over $400 million in Indonesia.

Indonesia now has the highest number of coronavirus cases and fatalities in Southeast Asia. As at June 22, it reported 45,891 cases with 2,465 deaths.

Mr. Malcolm believes outflows from the domestic stock market can be reversed when Indonesian authorities manage to control the outbreak.

“If an improving trajectory persists, it may not be long before flows return and the more positive longer-term prospects for Indonesia in a post-coronavirus world reassert themselves on the market,” he says.

Other asset classes that fell in the four months through April include government bonds, down 2.32% to 65.83 trillion rupiah, and mutual funds, down 8.89% to 13.82 trillion rupiah.

Asset classes that posted gains were time deposits, which rose 2.9% to 82.07 trillion rupiah, land, up 1% to 4.28 trillion rupiah, and Islamic bonds, up 0.3% to 4.01 trillion rupiah.