Indonesia’s domestic exchange is dominated by foreign investors motivated by capital gains. Less than 1% of the local population invests in Indonesia’s exchange, and those that do tend to prefer buy-and-hold strategies. Corporations have expanded their bond offerings amid a favourable market of low interest rates, high demand and a risk-free government yield curve. While the government works to diversify the onshore dollar bond offering, new hedging instruments are gradually being developed for onshore futures markets. The scope for currency features, among other areas, is considerable. Despite the political uncertainty that has arisen in the run-up to the elections in 2014, brokerages are forecasting a rally in equities during the second half of 2013 that will be more significant that that achieved in the fourth quarter of 2012. Inflows into the bond and equity markets are likely to be sustained, given the loose monetary policies in Western economies.
This chapter contains and interview with Eko Yuliantoro, President Director, Bahana Securities, and a viewpoint from Veronica Lukito, CEO, Ancora International.