Reaching Record Highs, Bond Index Increase Matches IHSG

Based on data from IBPA and the Indonesia Stock Exchange processed by Katadata, with an initial index of 100 on January 3rd, the Indonesia Composite Bond Index (ICBI) stood at 107.87 on May 30, 2017. Meanwhile, the Jakarta Composite Index (IHSG) was at 107.91. This means that between January 3rd and May 30th, 2017, the bond index rose by 7.87 percent, almost equal to the IHSG's increase of 7.91 percent.

Indonesia's achievement of investment-grade status led the Indonesian Composite Bond Index (ICBI) to reach a new record high of 224.92 at the close of trading on May 30, 2017. The perception of investment risk in Indonesia will also tend to decrease, thus potentially lowering the yield on Indonesian bonds. The impact will be a tendency for bond prices to rise, triggering an increase in the bond index.

The upgrade of Indonesia's foreign currency-denominated debt from BB+ to BBB- by the international rating agency, Standard & Poor's Global, triggered an inflow of foreign funds into the domestic bond market. This is evident in the increase in foreign ownership of government bonds by Rp 13.31 trillion (1.79 percent) to Rp 755.96 trillion on May 30, 2017, compared to Rp 742.65 trillion on May 18, 2017.