Pension funds to up investment in stocks
Pension funds to up investment in stocks
Rendi A. Witular, The Jakarta Post, Jakarta
Indonesian pension fund managers are likely to invest more
money into the stock market next year amid strong gains in the
soaring equity market, according to a pension industry
association executive.
"Pension funds will try to rake in as much as possible from
the stock market next year to take advantage of the bullish
trading there," Satino, chairman of the Indonesian Pension Fund
Association (ADPI) told The Jakarta Post on Wednesday.
Satino said the amount of pension funds to be allocated into
the stock market next year would increase by around 8 percent, or
about Rp 5.83 trillion (US$647 million) compared to this year's 6
percent allocation, or around Rp 3.42 trillion.
The Jakarta stock market registered a weekly yield of 4.15
percent last week in U.S. dollar terms, making it the world's
fourth most lucrative bourse.
Total investable funds managed by pension funds were expected
to grow by as much as 18 percent to some Rp 67.2 trillion next
year from this year's estimate of about Rp 57 trillion.
Satino said some 30 percent of the total investable funds
would be put into government bonds, 20 percent in corporate
bonds, 20 percent in bank deposits, 8 percent in equities, 5
percent in mutual funds, and the remaining 17 percent in property
and other portfolio investments.
Satino said the increase in the allocation for equities next
year was attributable to the limited amount of bonds available in
the market, prompting investors to look to other investment
portfolios deemed to be more lucrative.
The Jakarta Composite Index ended higher by 0.24 percent or
2.305 points at 961.324 on Wednesday, to another record high on
extended buying in selected blue chips. Trading volume was 2.79
billion shares worth Rp 1.96 trillion.
Analysts said the continuous surge in the Index was primarily
attributable to the decline in demand for U.S. dollar-based
assets due to a falling American greenback, triggering foreign
investors to seek more lucrative places for their money.
Other positive sentiments driving up the Index is optimism for
further improvement in the country's economy next year, with the
new government pledging to improve the domestic investment
climate.
But other analysts said the rally in the Index was caused by
intervention from the government, which plans to sell its
minority stakes in a number of banks next month via the stock
market. It is believed that state-owned pension funds and
insurance firms had been instructed to buy shares in order to
drive up the stock index.