Investor Eyes on Government Bond FR0082. The yield movement of the Government Bonds (SUN) simultaneously strengthened with the decision of Bank Indonesia (BI) which issued a new stimulus to maintain the economic stability of the homeland amid Coronavirus COVID-19 sentiments that hit Indonesia. Citing Bloomberg, SUN benchmark yield continues to rise. Monday (03/02), with SUN benchmark 5-year tenor FR0081 is at the level of 6.11%.
This position rises from Friday (02/28) which is at 6.10%. In fact, the lowest level for SUN benchmark FR0081 yield this year was created on 25 February, at the time of SUN benchmark yield at the level of 5.65%. As well as, SUN benchmark 10-year yield also back up. Today, the yield of FR0082 which is a reference of 10-year is at 6.93%. This position rises from Friday (02/28) which is still at 6.91%.
The lowest yield Level for FR0082 was created on 18 February, at that time this SUN yield was at 6.49%. Senior Vice President Recapital Asset Management Rio Ariansyah says, the massive spread of Coronavirus COVID-19 makes it difficult to guess until when the trend of foreign ownership decline in Government Securities (SBN) takes place.
On the other hand, rupiah exchange rate weakening against the USD could potentially encourage Government Bond yield to continue to advance. Rio Ariansyah assess the stimulus that the Bank Indonesia released has not been strong enough to resist the selling action of foreign investors. In the future, market conditions are still uncertain, until the issue of Coronavirus COVID-19 deployments in the homeland can subside.
As for one of the Bank Indonesia stimulus that allows foreign investors to sell or remove Government Securities and put it into the rupiah account, for later use as the underlying buy Domestic Non Deliverable Forwards (DNDF), still be denied by Rio Ariansyah. Regarding this DNDF, the Government Bond market still doubts whether the foreign investor can refer to it and consider it as an option.
Nevertheless, he believes the stimulus that is channeled while this is quite effective, especially the rupiah exchange rate succeeded to strengthen while. To that day, Rio Ariansyah is now a compelling time for investors to find the purchase level as cheap as possible. For now, Rio suggests, investors to glance at Government Bond with a short term.
Considering that the short term Government Bond tenor price tends to be safer than the risk of a very sharp decline. For the month ahead of SUN with a tenor of 5-year is expected to be in the range of 5.75% to 6.75%, while for SUN tenor reference 10-year are in the range of 6.45% – 6.65%. The investor’s attitude should now wait and see, but if the average buying is also fine, he added.