Indonesia’s biggest fund manager is taking the slump that’s driven the nation’s stocks into a bear market as the cue to start buying again.
BPJS Ketenagakerjaan, which manages about 193 trillion rupiah ($13.8 billion), will enter the equities market along with other state-owned institutional investors, Elvyn Masassya, its president director, said in a text message on Sunday. Shares are “relatively cheap,” he said, without naming any.
The Jakarta Composite Index is trading at the cheapest levels in 20 months after plunging 5.4 percent last week. The benchmark gauge entered a bear market on Friday after falling more than 20 percent since the April 7 peak as capital outflows accelerated amid a weakening economy, slumping commodity prices and the prospect of higher U.S. interest rates.
U.S. rate speculation and China’s surprise devaluation of the yuan triggered a selloff in emerging markets that’s spreading to developed nations. Besides Indonesia, Taiwan and Hong Kong entered bear markets last week.
Foreign investors pulled $185.4 million from Indonesian stocks on Aug. 20, the largest daily outflow since Dec. 24. Indonesia’s economy is growing at the slowest pace in six years as President Joko Widodo struggles to deliver on plans to revitalize growth.
Indonesia’s gross domestic product grew 4.67 percent in the second quarter, the weakest since September 2009, while corporate earnings dropped at 88 percent of companies tracked by Bloomberg in the quarter ended June 30.
While overseas investors have offloaded $1.35 billion of the country’s stocks in the past 12 months, the most after Thailand among Asian markets tracked by Bloomberg, the flood of cash out of Indonesia isn’t over, said Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management Ltd.
BPJS will accumulate stocks from “certain industries,” Masassya said. The Jakarta Mining Index dropped 32 percent from April 7, making it the biggest decliner among nine industry groups, as commodity prices plunged.
original source: http://www.bloomberg.com/news/articles/2015-08-23/indonesia-bear-market-sends-buy-signal-to-nation-s-largest-fund