Indonesia’s Top State Fund Steps Up Stock Buying After Plunge

PT Jamsostek, Indonesia’s biggest pension fund, is stepping up purchases of Indonesian stocks, President Director Elvyn Masassya said after the Jakarta Composite index plunged 11 percent in four days.

The state-owned fund is buying major companies and will increase its holdings of shares to 22 percent to 25 percent of assets under management, Masassya said in a mobile-phone text message late yesterday. Around 19 percent of the investment vehicle’s holdings were in equities, he said on June 19.

The Indonesian share gauge rose 1.4 percent to 4232.953 as of 9:29 a.m. in Jakarta. It pared losses to close 3.2 percent lower yesterday, after falling as much as 5.8 percent earlier. The market’s four-day plunge through yesterday is the biggest since 2011 and shares have dropped at the fastest pace worldwide this quarter, fueled by speculation the Federal Reserve will cut stimulus that has inflated asset prices in emerging markets.

“Jamsostek will enter the stock market, with a long-term market horizon,” said Masassya, who oversaw 144.2 trillion rupiah ($13 billion) of assets as of June. “We are buying blue-chip stocks.”

The rupiah has fallen 7.6 percent since the end of June, inflation accelerated to a four-year high in July and the current-account deficit swelled to a record last quarter, official data show. Overseas investors sold a net $182 million of the nation’s shares yesterday, the most since June 21, according to exchange data compiled by Bloomberg.

Mandiri Rebounds

The country’s Financial Services Authority, or OJK, doesn’t plan to suspend trading and met financial institutions today to listen to their views, Chairman Muliaman Hadad said in a mobile-phone message late yesterday. The OJK is asking market participants not to make the situation worse and to report to it every day, Hadad said, without elaborating. Bank Indonesia is coordinating with the OJK and the government to stabilize financial markets, Deputy Governor Perry Warjiyo said in a mobile-phone text message yesterday.

Large foreign funds have been driving the losses and Jamsostek only has a limited ability to support local stocks, Raymond Budiman, an equities analyst at PT Panin Sekuritas in Jakarta, said yesterday. Jamsostek is buying stocks along with other state-controlled funds, Masassya said, without giving details.

PT Bank Mandiri, the country’s largest lender by assets, fell 0.6 percent. It recovered in late trade yesterday to close 2 percent higher, after dropping as much as 7.2 percent earlier. The country’s largest-listed company, PT Astra International, rose 2.5 percent after closing flat yesterday. Masassya did not comment on what stocks he was buying.

Some investors are buying oversold shares, particularly Bank Mandiri, John Teja, a director at Ciptadana Securities in Jakarta, said yesterday. Sucorinvest Asset Management bought Mandiri because of a relatively low valuation, Jemmy Paul, a Jakarta-based equity fund manager, wrote in an e-mail yesterday.

“It definitely helps having Jamsostek,” said Edwin Sebayang, head of research at PT MNC Securities in Jakarta. “If the big ones enter, smaller funds would likely follow.”

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