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August 2020
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Indonesia mutual fund assets shed 11% in first half amid pandemic

Indonesian city
By Asia Asset Management  
July 13, 2020

Indonesia’s fund management industry assets fell 11% in the first half of 2020 driven largely by a more than 26% plunge in domestic stock funds as the coronavirus pandemic roiled global markets.

The industry had 482.55 trillion rupiah (US$33.66 billion) of total assets under management at the end of June, down from 542.17 trillion rupiah on December 31, 2019, according to latest figures published on the website of the Financial Services Authority of Indonesia.

The regulator typically posts the data without providing analysis.

Stock funds were the worst hit, diving 26.14% to 102.78 trillion rupiah in the six months through June from 139.16 trillion rupiah at the end of 2019 as the benchmark Jakarta Composite Index sank 21.93%.

The decline was primarily caused by foreign investors cutting their exposure to emerging markets to move into safe haven assets amid the coronavirus crisis, according to a fund manager at a Malaysian fund management company.

“There’s always a flight to safety during uncertain times like this,” the Kuala Lumpur-based fund manager tells Asia Asset Management, speaking on condition of anonymity.

Bond funds fell 6.75% to 113.76 trillion rupiah from 122 trillion rupiah at the end of last year.

Capital protected funds, which are bond funds that guarantee investors their initial investment plus any capital gains provided they are held for the full contractual term, were down 1.85% to 147.99 trillion rupiah.

In spite of the decline in bond assets, the manager says Indonesia’s debt market is stable with ample liquidity as demand is still strong.

“The country’s ten-year government bonds, and many corporate bonds issued by blue chip Indonesian companies, are offering yields of at least 7%. It’s really attractive during this challenging period,” he says.