Jamsostek won't cut investment in stocks

Rendi A. Witular, Jakarta

Despite huge losses in the country's stock market lately due to the unfavorable global economic environment, state-owned social security firm PT Jamsostek has said that it will not reduce its current allocation of investment in the stock market.

Jamsostek investment director Samuel Tobing said on Wednesday the company would not revise its investment allocation for the stock market this year at around 8 percent of the company's investible funds on optimism that the bourse would eventually pick up.

"There is a negative sentiment right now in the market, but I believe it is just temporary because the fundamentals of our bourse remain strong," said Samuel after a hearing with House of Representatives Commission VII for social affairs.

With an 8 percent allocation, Jamsostek investment in the stock market is estimated to reach about Rp 2.1 trillion (US$223 million) this year, compared to the company's investible funds currently reaching in total of Rp 27 trillion.

With such a huge amount of funds, Jamsostek is the only local institutional investor able to move the Jakarta Stock Market.

The stock market has lost more than 11 percent in the last couple of months due to various negative issues globally and domestically, such as the U.S. rate-hike plan, China's policy to slow the pace of its overheating economy and concerns over security conditions at home ahead of the July 5 presidential election.

The Jakarta Composite Index closed unchanged on Wednesday at 707.887 on volume of 1.20 billion shares worth Rp 919.14 billion.

But Samuel said that Jamsostek was reducing the amount of money it put in bank time deposits due to falling interest rates. At the start of the year, some 51 percent of its funds were invested in time deposits, which has declined to around 42 percent and is expected to decrease further to 40 percent at the end of the year.

Jamsostek has instead increased the share of its investible funds in bonds, both government and corporate, to 43 percent this year from around 35 percent at the end of last year due to higher yields of between 10 percent and 12 percent.

Jamsostek invests its remaining 7 percent of investible funds in the property and real sector.