Investors Start Turning Attention To Post-Pemilu Bonds

Rupiah (Photo: Antara)

JAKARTA - PT Bahana TCW Investment Management (Bacana TCW) said that market participants began to turn their attention to the bond market after the uncertainty of the general election (election) was reduced.

In addition, Senior Economist Bahana TCW Emil Muhamad projects that lowering the benchmark interest rate will provide positive sentiment from domestic to the bond market this year.

"We believe that 2024 will be the year of lowering interest rates which will have an impact on increased attractiveness and potential increase in the bond market. Although this will still not be seen in the first quarter of 2024, because the Fed is expected to start cutting its interest rates in July," he quoted Antara as saying.

Emil estimates that the bond market will be even more attractive after the Board of Governors Meeting (RDG) of Bank Indonesia (BI) decided to keep the BI-Rate at the level of 6 percent.

He believes BI will cut the benchmark interest rate in July 2024, after the Fed is expected to start its rate cut program in July 2024.

According to him, this is based on the Fed's latest projection which states that it will triple the Fed Fund Rate by 2024, or less than the market projection which had reached six to seven declines.

In addition, he continued, the potential for bonds was also driven by the sentiment of Indonesia's trade balance surplus for 45 consecutive months, which was the longest post-reforming record.

Then, during the first quarter of 2024, various government and public expenditures will be supported by the disbursement of social protection funds, the increase in the salaries of State Civil Apparatus (ASN), and the increase in UMR.

From a private perspective, he continued, the positive response of business players to the implementation of the one-round election will encourage business people to calculate funding needs for their businesses, which have the potential to increase the issuance of corporate bonds.

"The number of corporate bond issuances in 2024 is predicted to increase compared to last 2023," said Emil.

Launching data from the Indonesia Stock Exchange (IDX), the emissions of corporate and sukuk bonds throughout 2023 were 107 emissions from 57 companies with a value of IDR 117.80 trillion.

Meanwhile, the government issued Government Securities or Retail SBN worth IDR 147.42 trillion during 2023, from the issuance of seven retail SBN series offered by the government, namely SBR012, SR018, ST010, ORI023, SR019, ORI024, and St011.