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Investment Grade

More Investments May Chip in to Indonesia

“Financial market pressure from deliveraging would be scaled down”

Jum'at, 16 Desember 2011, 11:45 WIB

Nur Farida Ahniar

VIVAnews – Chief Economist of PT Bank Danamon Tbk, Anton Gunawan, said that more foreign investments will be chipped in to Indonesia following the nation’s regaining of investment grade set by Fitch Ratings. The rating helps reduce the pressure from financial market onto the country due to the debt crisis in Europe.
Several foreign investors have actually poured in capital in Indonesia in 2010 and 2011.  However, the regain opens more chances for foreign investors.
Anton said that although next year Indonesia might have to cope with the effects of the crisis in Europe and the United States US crisis, the current rating would still be a counterweight for new investors.
“Financial market pressure from deliveraging would be scaled down,” he told VIVAnews, on Thursday, Dec 15.
Rupiah will have similar issue as its volatility will get higher next year following the debt crisis in Europe.  However, with the investment grade rating, this would surely alleviate volatility pressure.
Another advantage of the rating increase, Anton continued, is that the cost to propose for financing from state or private parties will be lower. This in turn will boost the issuance of private bonds, especially when the global interest rate is still low.
Meanwhile, with regard to stock market, foreign funds may affect share prices.  However, stock market investors are more concerned about stock market performance and economic condition.
Such rating agencies as Moody's and Standard & Poor's have not increased Indonesia’s ratings. It is believed that Indonesia will regain investment grade next year.
“Moody’s may grant positive outlook as they have visited Indonesia and will release the review in January,” he said.