The Asset Update

Offshore flows give the edge in Indonesian rupiah bonds

03 Nov 2009 by The Asset Benchmark Research

Linked to flows from offshore investors, foreign banks are dominant players in the secondary market for Indonesian rupiah government bonds, but competition among them is increasing, the ninth annual Asian Currency Bond Benchmark Survey shows. 

 

Three years ago, Deutsche Bank controlled more than a fifth of the estimated secondary market turnover. 

But in the 2009 survey, Standard Chartered Bank has overtaken Deutsche Bank and now has the largest market share. J.P.Morgan has also strengthened its franchise in the past two years.  
Local asset managers and pension funds prefer to trade with the international banks mainly because they provide insight into the flows of offshore investors, including the proprietary trading desks of banks.
Other advantages investors cite include more extensive inventories, better research and more attentive sales teams. 
“The foreign banks make the prices - they sometimes use local brokerages to hide the names of their clients. There are not many large local funds that are able to counter the offshore players,” another Indonesian institutional investor comments.
The picture in the corporate bond market is different with local brokerage houses and securities firms taking an active role in secondary market trading.
In the 2009 survey, AAA Securities was the market leader.
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