Jakarta, 27 September 2023 – PT Bank Danamon Indonesia Tbk or Danamon (IDX: BDMN) is back with the Danamon Wealth Series 2023 market outlook. This time, the event is entitled Election Year Ahead: Turning Challenges into Opportunities. The event, which was carried in the form of a talk show and was held at Hotel Indonesia Kempinski in Jakarta, on Wednesday 20 September 2023, featured a discussion on a range of issues, including market conditions, challenges, and opportunities for economic growth and investment asset classes in Indonesia before, during, and after the 2024 Election.
Danamon considers that that amidst global uncertainty and domestic economic conditions that remain solid, it is very imperative for investors to obtain information regarding market outlook, which elaborates on Indonesia's economic growth in the second half of 2023. For the record, this period also coincides with months leading to the 2024 elections. These two main factors can become either a challenge or an opportunity for economic growth and investment asset classes in Indonesia.
Danamon Wealth Series 2023 presents experts in their fields, including Yunarto Wijaya as Executive Director of Charta Politika Indonesia and Edward Narodo as Head of Partnership Distribution PT BRI Manajemen Investasi. The event, which aims to provide updates and insight regarding market conditions and investment in Indonesia to Danamon Privilege customers, was also attended by Deputy President Director of PT Bank Danamon Indonesia Tbk Hafid Hadeli, Chief Economist of PT Bank Danamon Indonesia Tbk Wisnu Wardana, and Wealth Management Head of PT Bank Danamon Indonesia Tbk Yulius Ardi.
According to Yunarto Wijaya, elections in Indonesia are an important moment in the exercise of democratic rights in the country. Apart from having significant political implications for the economy and society, he added, elections can also bring both positive and negative impacts on the economy. "Elections that run smoothly can boost investor confidence in the Indonesia’s economy," he said.
In terms of money circulation, central bank Bank Indonesia noted that an increase in money circulation during elections is a common phenomenon and based on the previous 4 election cycle periods (2004, 2009, 2014, 2019), the JCI showed a positive trend for 6 months before the election. This condition shows that elections can be an opportunity for the Indonesian capital market in the fourth quarter of 2023, which is the 6-month period before the elections in February 2024.
Popularity of ESG Instruments Predicted to Increase
Apart from being influenced by conditions leading up to the elections, investment trends are also focusing on ESG (environmental, social, and corporate governance). This is a business approach used to evaluate an organization's financial risk, long-term sustainability, and goal achievement in these three performance areas.
To date, methods for measuring a company’s ESG aspects have developed quite rapidly over recent times due to the increasing role of ESG in investors' investment decision making. Some also forecast a transfer of wealth to Millennials and Gen Z from Baby Boomers and Gen X, increasing demand for ESG-based investment instruments. Nielsen reported that around 75% of Millennials are so environmentally conscious that they have changed their buying habits to favor green funds. A Pew Research Center survey also found that Millennials and Gen Z have high levels of involvement in climate change issues.
About 90% of Millennials are interested in pursuing sustainable investments. One-third of Millennials frequently or exclusively use investment products that consider ESG factors, while for Gen Z the percentage is 19%, 16% among Gen X, and 2% among Baby Boomers. There is a strong possibility that we will see the largest transfer of wealth in history as Baby Boomers pass on their wealth to Millennials. who are quickly becoming the largest class of investors. An EY study on cross-generational work-life challenges also predicts that Millennials will make up 75% of the global workforce by 2025.
Head of Distribution Partnership of PT BRI Manajemen Investasi Edward Narodo said that Millennials play an important role in ESG investment as this demographic segment invested $51.1 billion in sustainable investment-based instruments in 2020 - a significant increase compared to that in 2015 when investment in this segment was still less than $5 billion. Edward added that 40% of Gen Z stated that their investment decisions are driven by "companies that have goals" in the next 5 years, showing that the prospects for sustainable investment are considered quite bright. By 2025, it is expected that approximately 33% of all global assets under management will have SRI and ESG mandates.
During the event, BDI and BRIMI also announced a new product distribution collaboration called Danareksa MSCI Indonesia ESG Screened. It is an index mutual fund that refers to the MSCI Indonesia ESG Screened index, an index created by MSCI Inc. by implementing ESG screening from the constituents of the MSCI Indonesia index. The ESG screening process is carried out by using a negative screening methodology by excluding companies that do not comply with the UN Global Compact principles, which are reviewed on a quarterly basis.
In terms of global economic and political conditions, it is forecast that the Fed's policy will also influence the interest rate policies of other central banks, thus giving negative sentiment to the stock market and bond market in line with the increase in US Treasury yields and a correction on Wall Street. China’s economic slowdown also brings a negative impact on global and Asian stock markets. Problems in China's property sector, including cases of default by several property companies with the most recent being Country Garden, have deepened investors' concerns, forcing them to be at the risk-off mode once again.
However, from the domestic side, projections of economic growth, inflation, and the rupiah exchange rate which remains solid, controlled, and stable have put pressure on Bank Indonesia to increase interest rates to a minimum. Nevertheless, the unprecedented interest rate differential with a difference of only 25 bps with the Fed is something that the market is paying attention to, especially with concerns about the rupiah exchange rate that could weaken with the interest rate differential still falling.
On the same occasion, Consumer Funding & Wealth Business Head, of PT Bank Danamon Indonesia Tbk Ivan Jaya said that Danamon's commitment as a customer-centric organization and as "Your Bank of Choice" continues to strive to provide comprehensive financial solutions to help customers grow and achieve their financial goals.
"The unique value proposition of the Danamon Privilege Service focuses on maintaining the aspirations of each generation with wealth advisory solutions for asset development, various privileges from World of Privileges such as airport pick-up facilities & medical check-up facilities, easy access to complete digital banking services, as well as helping customers take control of their financial needs and goals. "This is the embodiment of Danamon's vision to care for and help millions of people achieve Prosperity," Ivan concluded.
For media inquiries, please contact:
Ni Luh Putu Utami Arsaningrum
Corporate Communications Manager
PT Bank Danamon Indonesia Tbk
Corporate Communications Head
PT Bank Danamon Indonesia Tbk