JAKARTA: After conducting the sales for nearly a month, foreign investors start to return into government bond market.
Based on the data of Directorate General of Debt Management on securities ownership per October 11, foreign ownership slightly rose by IDR1.57 trillion to IDR214.03 trillion from lowest position on October 7 position at IDR212.46 trillion.
Furthermore, Bank Indonesia ownership declined by IDR1.86 trillion to IDR23.92 trillion from highest position on October 7 at IDR25.78 trillion.
Release of ownership by foreigners continues to occur during the second half of this year in which the deepest decline occurred in September.
Foreign ownership over government securities in July was recorded at IDR248.87 trillion then down to IDR247.38 trillion in August and IDR218.09 trillion in September.
During the first five days of October, foreign capital outflow was recorded at IDR3.99 trillion.
Purchase of government bonds by Bank Indonesia increased by IDR13.04 trillion throughout the month, marking central bank intervention from August position at IDR3.99 trillion to IDR17.03 trillion in September.
Bank Indonesia's holdings in the governtment bonds rose IDR5.9 trillion to IDR22.22 trillion on October 5.
PT Nusantara Capital Securities’s bond analyst I Made Adi Saputra viewed the foreign net buy on government bonds has been taking place since October 7 when government bond prices rose significantly.
In his opinion, such condition will be a turning point if after the cut of BI Rate, foreign investors continue to buy government securities.
Investment risk
Indonesia’s credit default swap,which shows the level of investment risk, as of October 11 slightly rose after narrowing in four consecutive days.
CDS with one year tenor rose 0.68% from position on the previous day at 94, CDS with three years tenor rose 0.72% to 167.56 from 166.36.
CDS with five-year tenure rose 0.72% to 242.98 from 241.24 and CDS of 10 years in tenure rose 0.73% to 336.81 from 334.37.
The CDS hike, he believed, responded central bank's step to cut BI Rate to 6.5%.
Based on Association of Government Debt Securities Traders, government bonds index rose 0.01% to 106.38 yesterday from previous position 106.37.
However, PT Penilai Harga Efek Indonesia’s index showed price decline. Indonesia Government Bond Indices-Clean Price Index was closed down 0.07% to 127.92 from 127.99. (T05/NOM)
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