Mirae Asset Sekuritas Predicts Bond Market Is Still Stable Until Semester II-2024

JAKARTA - PT Mirae Asset Sekuritas Indonesia predicts that the market price of Government Securities (SBN) or medium-short tenor government bonds can strengthen in the near future.

Fixed Income Analyst Mirae Asset Karinska Bella Priyatno assessed that the increase in medium-short tenors, such as 2 years to 5 years in the midst of the current condition of the debt securities market, is still quite volatile.

Bella said the price of short tenor SBN is predicted to fluctuate with a yield or yield level at the level of 6.2 percent -6.35 percent, so market participants can take advantage of these fluctuations to gain profits.

"Until the end of the first quarter of this year, it can be seen that the market is more focused on medium and short tenor series, especially FR0101, FR0100, PBS030, PBS032, SPN, and SPSN series," Bella said on March 2024 Media Day, March 27, 2024.

According to Bella, price movements and yields of mutually contradictory bonds, so that when prices rise, it will put pressure on yields to fall, and vice versa.

Meanwhile, yield is a reference for investors' profits in the debt securities market compared to prices because it reflects coupons, tenors, and risks in one number.

Since the beginning of the year, Bella said that the medium-short income tenor instrument is still the main choice for market players.

In addition, the selection of medium-short tenors, according to Bella, is to take advantage of market volatility that occurs because medium-short tenors are more sensitive and volatile compared to longer tenors.

Bella said that currently investors also prefer short tenor bond instruments and take advantage of the near maturity schedule so that the risk of market racers is more maintained.

According to Bella, basically, fixed income instrument market fluctuations are currently still very dependent on macroeconomic data, especially from the US. However, the possibility of a decline in global and domestic benchmark interest rates is still a big theme this year.

"The global interest rate is still high, it still does not reduce the attractiveness of SBN because the yield rate or real yield from the 10-year SBN Indonesia tenor, which is in the range of 3.9 percent, is still quite interesting," he explained.

According to Bella, the main factor in Indonesia's SBN is still quite interesting because inflation was maintained at 2.75 percent in February.

Bella added that the real yield is still higher than neighboring countries such as Malaysia, China, and India.

"Currently, the difference between 10-year tenor SBN and 10-year tenor US Bonds (US Treasury) has narrowed, by 236 basis points (bps). The 100 bps is equivalent to 1 percent," he said.

According to Bella, the difference between the two instruments is not far from showing that market players are quite prudent towards bonds from Indonesia compared to other countries.

Meanwhile, the 10-year tenor is one of the benchmark tenors for the bond market along with a tenor of 5 years, 15 years, and 20 years.

"The price of 10-year government bonds can increase, so that the current yield at 6.5 percent-6.7 percent, later at the end of the second semester/2024 it will be able to decrease to 6 percent", he said.

Chief Economist Mirae Asset Rully Arya Wisnubroto said the belief in the bond market could not be separated from Indonesia's economic condition which is still quite resilient, even in the midst of a situation full of challenges and uncertainties.

"Some of the challenges ahead are interest rates that are still high and there is a trend of food inflation caused by rising prices for basic commodities," he said.