JAKARTA \u2014 In recent years, several global financial firms have\nreduced or ended some of their activities in Indonesia\u2019s capital market.\nMorgan Stanley closed its domestic share-trading business, while\nSchroders, the UK-based investment manager, has reportedly been seeking\na buyer for its Indonesian operation.<\/p>\n
The trend raises questions about the appeal of Indonesia\u2019s capital\nmarket to international financial firms. Are these decisions simply part\nof global restructuring strategies, or do they also reflect challenges\nin developing investment businesses in the domestic market?<\/p>\n
Schroders, an investment management company with a history spanning\nmore than two centuries, is reportedly planning to sell its Indonesian\nbusiness, which has around US$4 billion in assets under management. The\nplan was reported by The Business Times and Yahoo Finance in December\n2024.<\/p>\n
According to two sources familiar with the matter, the move came as\nSchroders considered exiting several markets deemed underdeveloped under\nits new chief executive, Richard Oldfield.<\/p>\n
Oldfield, who took up the post in November 2024, is said to be\nseeking to cut underperforming business units to improve the company\u2019s\nperformance after a series of disappointing earnings reports.<\/p>\n
The pressure on the company was also reflected in Schroders\u2019 share\nprice, which the reports said had fallen to its lowest level in 11\nyears.<\/p>\n
A Schroders Indonesia spokesperson said the company continued to\nspeak with prospective partners to ensure that services and value for\nclients were maintained. The company declined to comment on specific\nmarket speculation.<\/p>\n
Schroders seeks a buyer as several companies are reportedly\ninterested<\/p>\n
The Business Times reported that Schroders had appointed several\nadvisers, including UBS, to explore a possible sale of its Indonesian\nbusiness.<\/p>\n
At least four companies are reportedly interested. They include\nHSBC\u2019s asset management division, Allianz and Bank Negara Indonesia\n(BNI).<\/p>\n
BNI Corporate Secretary Okki Rushartomo said the bank was open to\nvarious options to strengthen its business group as part of its\ntransformation. However, he declined to comment specifically on the\npossibility of a transaction.<\/p>\n
The value of a sale of Schroders Indonesia has not been\nestablished.<\/p>\n
The planned divestment follows around three decades of efforts by the\ncompany to grow its business in Indonesia. Sources quoted in the reports\nsaid pressure on Schroders\u2019 shares had also raised investor expectations\nfor a change in the company\u2019s strategy.<\/p>\n
Schroders Indonesia is understood to manage around US$4 billion in\nassets, equivalent to about 1.6 per cent of the company\u2019s total assets\nunder management in Asia-Pacific. The region is Schroders\u2019\nsecond-largest market by assets managed.<\/p>\n
One challenge facing active investment managers such as Schroders is\ncompetition from passive fund managers and providers of alternative\ninvestment strategies in attracting new inflows globally. Some Asian\nmarkets are also considered yet to have fully realised their potential\nfor sustained asset growth.<\/p>\n
Nevertheless, seeking a buyer does not necessarily mean that all\ninvestments managed by Schroders will leave Indonesia. A sale of the\nbusiness could involve transferring ownership of the company or handing\nmanagement of the assets to another party.<\/p>\n
Morgan Stanley had already ended its domestic share-trading\nbusiness<\/p>\n
Before news of Schroders emerged, Morgan Stanley had taken steps to\nend its domestic stockbroking activities in Indonesia in 2021.<\/p>\n
In a report carried by Business Recorder in May 2021, the US\ninvestment bank said it intended to discontinue its domestic\nbroker-dealer activities in Indonesia.<\/p>\n
Morgan Stanley nevertheless reaffirmed its commitment to Indonesia\nand said it would continue to provide global clients with access to the\nstock market through partnerships with local securities firms.<\/p>\n
A source familiar with the decision said it affected around 10 jobs.\nSales, trading and research functions were subsequently to be carried\nout from Singapore, Morgan Stanley\u2019s operational hub in South-east\nAsia.<\/p>\n
Morgan Stanley\u2019s domestic share-trading business in Indonesia had\nonly opened in 2012. Earlier, in November 2011, then chief executive\nJames Gorman had said that developing the company\u2019s business in\nIndonesia was a priority and an important strategic commitment.<\/p>\n
The decision to end its domestic brokerage activities did not mean\nthat all Morgan Stanley services in Indonesia were being\ndiscontinued.<\/p>\n
The company said equity research coverage would be provided from\nabroad, namely Singapore. Meanwhile, PT Morgan Stanley Sekuritas\nIndonesia would continue serving domestic investment-banking\nclients.<\/p>\n
Morgan Stanley\u2019s move should therefore be understood as ending\nshare-trading through its domestic unit, rather than withdrawing all of\nits operations from Indonesia.<\/p>\n
Global restructuring and challenges in the domestic market<\/p>\n
The Schroders and Morgan Stanley cases show that global financial\nfirms\u2019 decisions to scale back activities in Indonesia do not\nnecessarily have the same causes.<\/p>\n
In Schroders\u2019 case, the planned sale of its Indonesian unit has been\nlinked to the new management\u2019s efforts to cut businesses considered\nunderdeveloped and improve company performance. Morgan Stanley,\nmeanwhile, explicitly said it would continue serving global clients\nthrough local partners after ending its domestic brokerage business.<\/p>\n
Even so, both decisions are relevant to assessing the competitiveness\nof Indonesia\u2019s capital market. For global financial firms, a large pool\nof investors alone may not be enough to ensure a sustainable\nbusiness.<\/p>\n
Trading liquidity, the potential for asset growth, operating costs,\nregulatory certainty, the quality of listed companies and revenue\nopportunities are among the factors that may shape decisions on how to\nallocate resources.<\/p>\n
At the same time, parent companies\u2019 decisions to streamline\noperations globally can affect their businesses in Indonesia, regardless\nof developments in the domestic market.<\/p>\n
The departure or reduction of activity by some global firms therefore\ncannot immediately be taken as proof that Indonesia\u2019s capital market has\nlost its appeal. Further assessment is needed to distinguish decisions\ndriven by companies\u2019 internal strategies from those related to local\nmarket conditions.<\/p>\n
For regulators and industry players, these developments are a\nreminder of the importance of strengthening the capital-market\necosystem, from improving the quality of listed companies and deepening\nliquidity to enhancing disclosure and strengthening investor\nprotection.<\/p>\n
Ultimately, Indonesia\u2019s challenge is not only to attract\ninternational financial firms, but also to ensure that the domestic\nmarket offers competitive business conditions and strong reasons for\nthem to remain and expand over the long term.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/from-schroders-to-morgan-stanley-why-are-global-financial-giants-looking-to-exit-indonesia-1792425018", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }