Will The Year of Politics In Indonesia Affects The Bond Market Investment?
Will The Year of Politics In Indonesia Affects The Bond Market Investment?
Here’s why:
If we look further from its history, the conditions of bond’s market improves much better every political years. The Director of the Indonesia Bond Pricing Agency (IBPA) Wahyu Trenggono explained, if you want to see the condition of the bond market, it can be seen from the yield curve. The lower the yield curve, the better the market conditions. Investors tend to believe that bond will return attractive yields.
He explained, one year before the political event, there was indeed a tendency for fluctuation in the financial markets. But the year after, the economy will begin to show improvement. Indonesia’s economic fundamentals, for example, occurred during the 2014 presidential election. At that time there was an economic fluctuation in 2013, where inflation was at 8.07%. But a year after, inflation fell to the level of 6.23%.
Foreign investors see Indonesia as a positive outlook in the long term. This can be seen from the macroeconomic indicators in a stable condition, and the fundamentals are maintained. In December 2008 the yield of 10-year government bonds (SUN) was 12%, then in December 2013 there were almost 9%. While for this year (2019) SUN yield is around 8%. This condition shows that the yield curve tends to be low, which means better market conditions, so the potential for default is very low. Since yield is getting lower, investors will see the political year and election as a lesser risk. That’s good, because they will increase their investment in political year.
However, there’s usually a pattern of decreasing the number of bond issuance in the political year, because publishers and investors still tend to wait and see, waiting for the results of the winner of the election event to determine the decision.
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[1]https://finance.detik.com/bursa-dan-valas/d-4429921/pasar-obligasi-kebal-gejolak-politik-ini-buktinya
[2]https://www.gatra.com/rubrik/ekonomi/pasar-jasa-keuangan/390956-Tahun-Politik-Tak-Akan-Pengaruhi-Pasar-Obligasi
[3]https://republika.co.id/berita/ekonomi/keuangan/18/11/06/phrse3370-tahun-politik-pasar-obligasi-diprediksi-terus-tumbuh
[4]https://kumparan.com/@kumparanbisnis/tren-pasar-obligasi-tak-akan-ramai-di-tahun-politik-27431110790548271
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