No. This is not James Bond from Ian Fleming’s famous detective story. Bond or obligasi in Bahasa Indonesia gains so much popularity from many investors who want to put their money into Indonesia. Indonesia remains like a bond heaven for foreign investors amid debt crisis happening in some European countries.
So, what the hell bonds are?
Other names of bonds are debt papers. They are issued either by government or corporate to raise funds. If we buy bonds that mean we put our money at some companies or government which will be paid later along with coupon rates. Each bond has different coupon rate or similar to interest rate. It also has various tenor or maturity, ranging from less than one year up to 20 years. The money we will obtain when the bonds mature along with the coupon rates are called yields. For your information, Indonesia’s bonds have average coupon rates of 9 percent, much higher than 3 percent of coupon rates in the U.S market.
In Indonesia, there are many kinds of bonds. The government via Finance Ministry issues Surat Utang Negara and other kind of sovereign bonds or government bonds. There is also sukuk, syariah-based bonds, to lure Muslim investors. Samurai bonds are for Japanese investors because they are in yen denomination. If above bonds seem too expensive to buy, individuals can invest through sukuk ritel or sukri. This can be sold as low as Rp 5 million, particularly offered for small-scale investors.
One rule applies in the corporate bonds. The higher coupon rates, the riskier the bonds are. Any firms that issue high coupon rates have a possibility that they may face a default or fail to pay back the debt papers to their investors. To prevent from bigger loses, investors must be given high coupon rates to cover any possible default when the bonds mature. You guys may think “are this kind of way able to attract foreign investors?”. At first, I thought about that. But later I realize Indonesia is growing so fast among its Southest Asian peers that capital inflows are running so quickly in our market. Despite political and rampang corruption cases tainted Indonesia’s image, I proudly say at least the wheel of economy keeps on growing.
Last week, I and office mates learnt about making stories out of stocks statistic and data. At first, they looked like alien numbers that put us at wonder on how to put them all into words. But as our boss enlightened us a bit about stocks, things are now easier.
Indonesia’s stocks are listed at the Indonesia Stock Exchange, a database home for four hundread companies, which conduct an initial public shares of offerings prior to the listing. At the bourse, we can look at stocks movement by companies, sector, country. For instance, we can compare Bank Mandiri’s stocks with Bank Central Asia’s. Or we can take mining sector and compare with the whole composite index on a particular day.
After we are done with number comparison, here comes the most difficult part; the so-what factor. To create a good piece of information, a comprehensive context is badly needed. And this becomes the heart of all.
Explaining the ups and downs of stocks of specific companies are easy but I get stuck when I have to find appropriate reasons beyond the number movements.
Last Friday, for instance, the Indonesia Stock Exchange recorded a psychological level by hitting more than 4,000 points. This already poses a question. Why did the bourse rise so high? News has it that Indonesia takes advantage of possible downgrade rating for U.S’ sovereign debt.
On that day, stocks from local banks led the bourse. This created another question. Why banks? The explanation is many investors were rushing to buy banks’ stocks after Indonesia’s central bank decided to keep benchmark rate on hold at 6.75 percent. This means domestic banks may likely not to raise interest rates, be they for housing mortgage or deposit, thus creates a confident sentiment that banks will lend more credit to their customers. The more credit they lend, the more net interest income they will gain. In short, banks is expected to raise more profits.
Okayyy.. Enough for tonight’s lesson. I really need to read a lot so that I can discover suitable context for each stock story.