Indonesia’s pension fund industry assets rose 0.73% in the first half of 2024 as bond gains driven by retirement funds’ purchases of sovereign and corporate debt for the high yields offset declines in stocks.
The pension industry ended the six months to June with 359.9 trillion rupiah (US$28.42 billion) of assets, up from 357.3 trillion rupiah last December, according to new figures published on the website of the Financial Services Authority of Indonesia. The regulator typically posts the data without providing analysis.
The industry’s government bond assets rose 3.19% to 131.14 trillion rupiah and corporate bonds were up 1.2% to 6.76 trillion rupiah. But its stock assets dived 12.38% to 24.64 trillion rupiah.
Local pension funds will probably step up exposure to stocks over the next 12 months as consumer prices continue to fall, according to a fund manager at an Indonesian asset management company,
“As inflation eases and [global] interest rates decline, investors will increase their focus on stocks,” he tells Asia Asset Management, speaking on condition of anonymity.
Data from the Indonesian statistics bureau shows that the inflation rate dropped to 2.51% in June from 2.84% in May. Last year, the inflation rate fell to 2.8% from 4.2% in 2022.