January 19, 2023
JAKARTA – An anticipated weakening of the United States dollar will make Indonesian markets more desirable for international investors, helping prop up the rupiah amid global and domestic uncertainty, analysts have said.
Samuel Kesuma, senior portfolio equity manager at Manulife Asset Management, said investors expected the US dollar to weaken sometime later this year, which would incentivize investors to move to emerging economies’ capital markets.
“We believe that for emerging markets like Indonesia, currency will become a driving factor why foreign investors would want to invest […]. That is why we see Indonesia’s outlook remaining positive,” Samuel said at a virtual press conference on Tuesday.
Katarina Setiawan, chief economist and investment strategist at Manulife Asset Management, expected Indonesian inflation to cool down this year as food prices stabilized and the effects of slashed government fuel subsidies were absorbed.
“This means there [will be] less pressure on Bank Indonesia [BI] to raise interest rates,” Katarina said at the press conference.
She expected foreign investors to be mostly undeterred by the political climate ahead of the 2024 presidential election but to employ a somewhat different strategy this year.
The majority of investment would likely come in the first half of the year, before campaigning picked up, Katarina predicted, noting that this preference would extend to IPOs as well.
“Usually around election periods, there is the tendency for capital expenditure from foreign investment to be delayed. This time, however, we see that there may be investment frontloading,” Katarina said.