Danamon Wealth Series 2023: Turning Challenges into Golden Opportunities 2024

Photo: Doc. Danamon

JAKARTA - PT Bank Danamon Indonesia Tbk or Danamon (BDMN) is again presenting the Danamon Wealth Series 2023 market outlook event, this time entitled Election Year Ahead: Turning Challenges into Opportunities. The event took the form of a talk show and was held at the Hotel Indonesia Kempinski, Jakarta, on Wednesday, September 20, 2023 which discussed market conditions, challenges, and opportunities for economic growth and investment asset classes in Indonesia leading up to, during, and after the 2024 Election.

Danamon views that in the midst of global uncertainty and domestic economic conditions which are still solid, it is very important for investors to obtain information regarding the market outlook which discusses Indonesia's economic growth in the second half of 2023. Moreover, this period also coincides with the momentum for the preparation and implementation of the 2024 General Election. Second These main factors can be a challenge or opportunity for economic growth and investment asset classes in Indonesia.

Danamon Wealth Series 2023 presents speakers who are experts in their fields, such as Yunarto Wijaya as Executive Director of Charta Politika Indonesia and Edward Narodo as Head of Partnership Distribution PT BRI Manajemen Investasi. The event, which aims to provide updates and insight regarding market conditions and investment in Indonesia to Danamon Privilege customers, was also attended by Hafid Hadeli as Deputy President Director of PT Bank Danamon Indonesia Tbk, Wisnu Wardana as Chief Economist of PT Bank Danamon Indonesia Tbk, and Yulius Ardi as Wealth Management Head PT Bank Danamon Indonesia Tbk.

Yunarto Wijaya said that the elections in Indonesia were an important moment in the implementation of democratic rights in this country. Apart from the significant political implications for the economy and society, he said, elections can have both positive and negative impacts on the economy.

"Elections that run smoothly can increase investor confidence in the Indonesian economy," he said.

In terms of money circulation, Bank Indonesia noted that an increase in money circulation during elections is a common symptom, and based on the history of the previous 4 election cycle periods (2004, 2009, 2014, 2019), the JCI performance showed a positive trend since 6 months before the election. This certainly illustrates that the elections can be seen as an opportunity for the Indonesian capital market in the fourth quarter of 2023, which is the 6 month period before the elections in February 2024.

The Popularity of ESG Instruments Predicted to Increase

Apart from being influenced by conditions leading up to the election, investment trends are also focusing on ESG (environmental, social, and corporate governance). It is a business approach used to evaluate an organization's financial risk, long-term sustainability, and goal achievement in these three performance areas.

So far, methods for measuring company ESG aspects have developed quite rapidly over recent times due to the increasing role of ESG in investors' investment decision-making.

A number of groups also predict a transfer of wealth to Millennials and Gen Z from Baby Boomers and Gen X, which will increase demand for ESG-based investment instruments.

According to Nielsen, around 75 percent of Millennials are so environmentally conscious that they are changing their buying habits to favor green funds. A Pew Research Center survey found Millennials and Gen Z stand out for their high levels of engagement with climate change issues.

About 90 percent of Millennials are interested in pursuing sustainable investments. One-third of Millennials often or exclusively use investment products that consider ESG factors, 19 percent Gen Z, 16 percent Gen X, and 2 percent baby boomers. In all likelihood, we will witness the largest transfer of wealth in history as baby boomers pass on their wealth to Millennials who will soon become the largest investor class. Plus, an EY study on work-life challenges across generations predicts they will make up 75 percent of the global workforce by 2025.

Edward Narodo, Head of Distribution Partnership, PT BRI Manajemen Investasi said, the Millennial generation has an important role in ESG investment where this demographic has invested USD 51.1 billion in sustainable investment-based instruments in 2020.

This is a significant increase compared to 2015 where investment in this segment was still less than 5 billion US dollars. Edward also added that 40 percent of Gen Z stated that their investment decisions were driven by "companies that have goals" in the next 5 years. This gives a signal that the prospects for sustainable investment are considered quite bright. By 2025, it is expected that approximately 33 percent of all global assets under management will have SRI and ESG mandates.

In this event, BDI and BRIMI announced a new product distribution collaboration, Danareksa MSCI Indonesia ESG Screened, namely an index mutual fund that refers to the MSCI Indonesia ESG Screened index, an index created by MSCI Inc. by implementing ESG screening from the constituents of the MSCI Indonesia index. The ESG screening process is carried out using a negative screening methodology by excluding companies that do not comply with the UN Global Compact principles, which are reviewed every quarter.

Meanwhile, in terms of global economic and political conditions, it is predicted that the Fed's policy will also influence the interest rate policies of other central banks, thus giving negative sentiment to the stock market and bond market in line with the increase in yields from the US Treasury and a correction on Wall Street. The economic slowdown in China also has a negative impact on global and Asian stock markets. Problems occurring in China's property sector, with cases of default by several property companies, most recently Country Garden, have increased investors' concerns so that investors are risk-off again.

However, from the domestic side, projections of economic growth, inflation and the rupiah exchange rate which are still solid, maintained and stable make the pressure for Bank Indonesia to increase interest rates minimal. However, the interest rate differential with a difference of only 25 bps with the Fed, which has never happened before, is something that the market is paying attention to, especially with concerns about the rupiah exchange rate which could weaken with the condition of the interest rate differential which is still falling.

On the same occasion, Ivan Jaya, Consumer Funding & Wealth Business Head, PT Bank Danamon Indonesia Tbk, said Danamon's commitment as a customer-centric organization and as "Your Bank of Choice" continues to strive to provide comprehensive financial solutions to help customers grow and grow. achieve his financial goals.

"The unique value proposition of the Danamon Privilege Service focuses on maintaining the aspirations of each generation with wealth advisory solutions for asset development, various privileges from World of Privileges such as airport pick-up facilities & medical check-up facilities as well as easy access to complete digital banking services, for "helping customers take control of their financial needs and goals. This is the embodiment of Danamon's vision to care for and help millions of people achieve prosperity," concluded Ivan.