Foreign Investors Exit the Stock and Government Bond Markets

Since February 2018, foreign investors have begun exiting the domestic financial market. In the stock market, foreign investors recorded net sales of Rp 10.34 trillion last month. Similarly, foreign investors in the Government Securities (SUN) market also recorded net sales of Rp 21.55 trillion.

In total, throughout February, foreign investors recorded net sales in the stock exchange and SUN market reaching Rp 31.88 trillion. As a result, the Jakarta Composite Index (IHSG) of the Indonesia Stock Exchange corrected by 0.13% to 6,597.22, and the rupiah weakened by 2.19% to the level of 13,707 per US dollar.

The outflow of foreign investors continued this month. During the period of March 1-9, 2018, foreign investors again recorded net sales in the stock market of Rp 5.9 trillion and in the SUN market of Rp 17.3 trillion, totaling Rp 23.17 trillion. The impact was a further correction of the IHSG by 2.48%, and the rupiah depreciated by 0.63%. In anticipation of an increase in the US central bank's (The Fed's) benchmark interest rate, fund managers shifted their investments from currencies considered risky to safe haven currencies such as the US dollar or Japanese yen.