Investor Concerns Grow in Indonesian Markets
Since the beginning of the year, yields have risen by more than 140 basis points, marking one of the largest increases among emerging Asian economies.
Indonesia’s 10-year government bond yield rose by 3 basis points to 7.52% on Tuesday, reaching its highest level since November 2022. Since the beginning of the year, yields have increased by more than 140 basis points, marking one of the largest rises among emerging Asian economies.
The Indonesian rupiah is trading just 0.2% above its all-time low. Meanwhile, the country’s benchmark stock market index recorded its sharpest weekly decline, falling by as much as 2.7%.
Handy Yunianto, head of fixed-income research at PT Mandiri Sekuritas, said that MSCI’s warning was expected to have a limited direct impact on bond yields. However, continued foreign investor outflows from the stock market could put further pressure on the rupiah and create additional risks.
According to the expert, 10-year government bond yields are approaching their estimated fair range of 7.5%–7.7%. Yields could begin to decline if risk aversion eases and oil prices fall.