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Foreign ownership of gov't securities hits all-time high

Jakarta Globe - September 20, 2019

Abdul Aziz, Jakarta – Foreign investors owned 45.83 percent of Indonesian government securities as of Tuesday, the highest in history, according to data from the Ministry of Finance.

Foreign ownership usually amounts to between 34 percent and 38 percent of rupiah-denominated bonds, but it has been increasing steadily over the past three months.

While foreign ownership has soared from 39 percent on June 27, the value showed a slight decline.

The highest foreign investment in state bonds was Rp 1,022.23 trillion ($72.8 billion) on Sept. 13, when foreign investors held 38.55 percent of government securities. When foreign ownership peaked at 45.83 percent, the investment was valued at Rp 1,004.17 trillion.

The loss in value could be attributed to several factors, such as payment due dates, buybacks by the government or central bank, and discounts.

Total outstanding investments in government securities also fell to Rp 2,190.99 trillion on Tuesday from Rp 2,368.45 trillion on Dec. 31 last year.

High foreign ownership could pose a serious capital outflow risk, which in turn could shake the stock market and weaken the rupiah.

Finance Minister Sri Mulyani Indrawati has repeatedly called on local investors to increase their investments in government securities.

Source: https://jakartaglobe.id/context/foreign-ownership-of-govt-securities-hits-alltime-high