Foreign Investor Ownership in Government Securities worth IDR961.63Trn. The flow of funds of foreign investors to the Government Securities (Surat Berharga Negara/ SBN) still keep flowing until yesterday, despite the increasingly positive sentiment today disappear and make the market corrected.
Portion of investors in the SBN market based on Directorate General of Budget Financing and Risk Management (DJPPR) Ministry of Finance, shows foreign investors grasping IDR961.63Trn of SBN, or 38.75% of total circulating IDR2,481Trn based on data as of 27 March 2019.
These Ministry of Finance data is usually lagging during up to 4 days from the actual day. Ownership it became the highest position of all time and the highest portion is big this year, given in January last year the percentage of foreign investors had exceeded 40%. Ownership figures per 27 March is still positive at IDR68.38Trn compared to IDR893.25Trn late December position, so the percentage is still up from 37.71% in the same period.
Yesterday, the price correction SBN occurs in partial. The fall in the government bonds (Surat Utang Negara/ SUN) price it’s not similar with the appreciation which occurred in the other developing country Governments bond market. Refinitiv SUN correction price data shows was reflected in the four benchmark series, and raises the level of return the result (yield). The price movement and mutually contradictory bonds yield in the secondary market.
Yield is also more commonly made of reference transaction price than bonds because it reflects the coupons, the tenor, and the risks in one number. Conventional government bonds (SBN) rupiah trading heaviest in the domestic market, so that it can reflect the conditions of the bond market in General.
The fourth series which became a reference point that is: 5-years FR0077, 10-years FR0078, 15-years FR0068, and 20-years FR0079. The Government bonds market correction yesterday reflected on the prices of bonds, naturally, where the INDOBeX Government index Total Return from Indonesia Bond Pricing Agency (IBPA) are still weakening.
Similarly, the index was down 0.59 points (0.24%) 246.22 from yesterday’s position became 246.81. Correction of SBN today also makes the difference (spread) of the 10-years government bonds rupiah with US Government bonds (US Treasury) a similar tenor reach 528 bps, widening from yesterday’s position 519 bps.
In fact, the 10-years US Treasury yield was down again to 2.37% from yesterday’s 2.41%. Associated with the US Treasury market, while this still happens inversion on 3-months to 5-years series, 2-years to 5-years, and 3-months to 10-years. Inversion on a tenor of 3-months to 10-years is rare, even recently happened again on Friday last week after no longer occurs since 2007. Inversion is a condition more high yield series shorter than yield a longer series.
Last, The yield curve inversions form upside down (inverted yield curve), which became a reflection of investors who are more eyed on long-term US Treasury than the short-term series due to assess short-term contraction will occur, as well as indicators of the presence of potential economic pressures even up to the crisis. Developing country bond markets, strengthening occurred in Brazil, China, India, Philippines and Singapore.
In developed countries, strengthening occurred in the Germany bund, and United Kingdom gilt markets, indicating the onset of contraction still on the European financial markets so that the Germany bond is considered one of the safest instrument, it is still hunted to yield him down be a minus.