Indonesian Sovereign Fund Danantara Buys Shares Following Market Selloff
Indonesia's sovereign wealth fund Danantara is deploying capital into domestic equities after an MSCI warning triggered a market selloff in Jakarta.
POLICY WIRE — Jakarta, Indonesia — Indonesia’s sovereign wealth fund, Danantara Indonesia, has stepped into the local equity market to acquire shares following a sharp sell-off triggered by an MSCI warning regarding the nation’s market classification.
BPI Danantara Indonesia Chief Investment Officer Pandu Sjahrir announced that the agency has begun purchasing equities over the past two days, focusing on companies and state-owned enterprises whose share prices have dropped despite maintaining robust underlying fundamentals.
The sovereign investment agency plans to increase its holdings in fundamentally strong state-owned companies as the Jakarta Composite Index experiences downward pressure, viewing current market weakness as a viable investment opportunity.
Danantara has already invested approximately $3 billion in stocks and bonds, with the possibility of deploying an additional $1 billion by the end of the year if prevailing market conditions warrant further action.
The fund currently maintains an asset allocation consisting of 65% equities, 30% fixed income, and 5% hedge funds, with roughly 25% of its total assets invested domestically in Indonesia.
Danantara expects to deliver a 200 to 300 basis point return while selectively purchasing more assets during sell-offs driven by temporary market sentiment, according to the fund’s leadership.
Reporting by Policy-Wire (PW)
