Beating banks: Indonesia’s non-bank institutions to buy most government bonds

Non-bank financial institutions could absorb 30-35% of the projected supply between now and 2016.

Standard Chartered expects assets under management by insurance, pension and mutual funds to increase to over USD 440bn in 2020 from USD 54bn in 2009.

Here’s more from StanChart:

Rising incomes, urbanisation, development of the Islamic finance sector and infrastructure spending needs are expected to drive the rapid expansion of Indonesia’s non-bank financial institutions (NBFIs).

NBFIs are the second-largest domestic investor in the government bond market. The fall in government bond yields in recent years has curbed demand and government bond ownership will not grow significantly in the near term, in our view.

In the longer term, buoyed by high asset growth, we expect NBFIs to overtake banks as the largest domestic buyer of government bonds, absorbing 30-35% of the projected supply between now and 2016. NBFI growth is necessary for the development of the bond market.

As NBFIs diversify their investment portfolios, demand for alternative onshore and offshore assets is likely to pick up. Assuming a 15-20% investment allocation to offshore assets, Indonesia’s NBFIs will be looking to invest USD 75bn abroad in 2020.

Initially, this is likely to be concentrated in high-grade (HG) assets, but could shift to high-yield (HY) over time as local fund managers become more familiar with the overseas environment.

Photo credit: Mr. T in DC

The people you want to reach are already in this room.

Every quarter, SBR lands on the desks of the founders, CFOs, and directors running Asia's most consequential companies. Every day, they open our newsletter and read our website. It's a room that took twenty years to build — and it's the one most of our partners are trying to get into.

The good news is that the door is open. We work with companies on thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. The shape of the right partnership depends on what you're trying to do, which is why we'd rather start with a conversation than send a rate card.

If you have something this room should know about, tell us. We'll tell you honestly whether we can help, and how.

No rate cards until we understand the brief. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia