Our funds’ target market fund flows in Asia have turned positive in recent weeks. While flows to bonds turned already in Q4 2018, now funds are flowing more clearly toward equities.
As global economy is now slowing, funds are flowing toward Asia’s structurally and domestically growing countries.
Compared to size of the underlying equity market, Indonesia’s and Philipines’ equity markets have received the largest flows, so far in 2019. Source: Bloomberg
Outflow from Indonesia’s equity market since May 2017 was nearly as large as inflows during 2009-2016. For now , at least, fund flows have turned positive as the economic cycle is turning up in Indonesia. In addition, if elections in April 2019 run smoothly and President Joko Widodo wins second term to run the country (as is widely expected), we believe that uncertainty over politics and the economy vanish, consumer confidence shoots up and the investment cycle gains more speed. All this will create a nourishing environment for Indonesia’s capital markets in 2019.
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