“Our base case remains that this is more of noise at the moment, but we do see increasing fiscal risk and hence the market may start to require more risk premium on Indonesian government bonds,” You can also read about the importance of this in our article Jenny ZengChief Investment Officer of APAC Fixed Income at a multinational financial services company Allianz.

Indonesia’s Finance Minister Sri Mulyani Indrawati Speaking at the G20 in 2022. Her The replacement of the syringe is not yet certain. PhotoAP
“Also another risk is because there’s a change of ministers,” Zeng The uncertainty about the successor to the highly acclaimed former-president was cited.World Bank managing director Sri Mulyani.

A banker at a Chinese lender in Indonesia According to the company, fiscal concerns led it to diversify its portfolio by moving around 30% into lower-tenor instruments. This included short-term securities denominated in Rupiah and issued by Bank Indonesia.

Prabowo Winning the election in FebruaryThe first term of office is in October. His Free-meal plan that his team estimates to cost 71 billion rupiah (4.35 billion US dollars) by 2025 shouldn’t normally cause any concern.
Southeast Asia’s The finances of the largest country have improved under incumbent Joko WidodoThe administration of’s runs a healthy fiscal surplus. From Its bonds, which were rated junk when the new century began, are now regarded to be investment grade.

Some Investors even see the merit in Indonesia Spending more money to achieve its economic growth goal of 8 per cent. Yet There’s uncertainty about the amount of money Prabowo In order to balance his books, he should know how much he intends to spend and whether or not he plans to cut fuel subsidies, other investments and subsidies.

Students A junior high school near the city of Jakarta Eat lunch during a test of Indonesia’s Free school meals programme February. Photo: Reuters

“It appears there will be more uncertainties than certainty. I still stay invested but probably not as overweight as I used to be,” You can also read about the importance of this in our article Clifford Lau, a portfolio manager at multinational investment bank William Blair.

Foreign Overseas investors have pulled US$2.8billion from the rupiah stock market and government bonds since June This year is the first time that we will be able to see this.

The The rupiah has fallen to its lowest level in four years against the dollar. Its losses this year have been more than five per cent, but most of it is in line with a general decline in emerging markets currencies due to rising US yields, and a rising US dollar.

Investors Those looking for higher yielding bonds are also switching to Indiawhose bonds have not only comparable yields, but also have just made it to JP Morgan’s Global index

[Prabowo’s] also talking about the need to increase fiscal revenue … so it’s actually not entirely about increasing expenses

Jerome Tay, Abrdn Investment manager

The Selling has increased yields Indonesia’s Ten-year Bonds Up 35 Basis Points Since Late May, or 7,05%

Some Investors are giving Prabowo Give him the benefit-of-the doubt. He will point out that his administration is also planning to increase revenues, improve tax compliance, as well as cap the fiscal surplus at 2.8 percent of gross domestic products, even if it’s higher than this year’s 2.3 percent goal.

“He’s also talking about the need to increase fiscal revenue … so it’s actually not entirely about increasing expenses,” You can also read about the importance of this in our article Jerome TayInvestment Company Abrdn’s investment manager for Asia. Tay Positive on Indonesian Government bonds are a good investment for the medium-term.

Those bonds have long been a favourite among emerging market investors for their ‘carry’ or high yield.

A customer shops for clothes in a shopping mall Depok, Indonesia. The The rupiah has fallen by more than 5% this year, the lowest level in four years. Photo: EPA-EFE

The spread between Indonesian The US bond yields are now only half what they used to be, which was 600 basis points. Federal Reserve Despite the fact that rates have been increasing since 2022, fixed-income investments are still attractive.

The Foreign holdings now account for only 14% of outstanding government debt. They Back in the day, we owned about half of these bonds.

Expectations The word “that” is a phrase that means, “that which”. Fed Some comfort for rupiah is that the rates will soon be reduced. Indonesian Bond investors RudiyantoDirector at local asset management Panin said.

But There are other risks, such as the massive debt maturities in 2025 of 800 trillion rupiah, almost double what they were this year. Sri Mulyani Refinancing is not a problem if the government keeps up market confidence.

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