September 2021
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September 2021
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Indonesia mutual fund, pension assets decline on Covid-19 worries

Southeast Asia is being buffeted by a new wave of the pandemic. In Indonesia, new cases have been on the rise since May and hit a record 56,757 on July 15
By Goh Thean Eu   
July 23, 2021

Indonesia’s fund management and state pension industry assets fell, dragged down by falling stock prices amid rising concern that the coronavirus pandemic will hurt economic recovery.

The fund management industry had 536.11 trillion rupiah (US$38.66 billion) of assets as of end-June, down 6.53% from 573.54 trillion rupiah at the end of 2020, 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 fell 3.39% to 122.15 trillion rupiah while bond funds edged up 0.65% to 143.24 trillion rupiah.

Separate figures also published by the regulator show that the state pension fund industry assets fell 2.33% to 210 trillion rupiah in the five months through May from 215 trillion rupiah at the end of last year.

The industry’s government bond assets rose 11.32% to 83.19 trillion rupiah but equity assets fell 6.22% to 29.15 trillion rupiah. The benchmark Jakarta Composite Index fell 2.13% through the first five months of 2021.

Indonesia has the most number of coronavirus cases in Southeast Asia, which is being buffeted by a new wave of the pandemic. New daily cases in Indonesia have been on the rise since May and hit a record 56,757 on July 15.

Investors have been shifting allocation from stocks to safe haven assets such as government and corporate bonds because of concerns about a further economic slowdown from the new wave of the pandemic, according to a portfolio manager at an Indonesian fund management company.

“The optimism investors had early this year has diminished. With the rising Covid-19 cases, there is a higher possibility that the government may impose stricter rules to curb the pandemic. I would not be surprised if the central bank cuts its GDP forecast again this year,” he tells Asia Asset Management, speaking on condition of anonymity.

Indonesia’s central bank cut its forecast for 2021 economic growth to 3.8% on July 12. It had previously forecast the economy to grow 4.6%.

The Indonesian economy shrank 2.1% last year, the first contraction since the Asian financial crisis in 1998.