The Jakarta Globe reported that Schroders Indonesia will increase its Indonesian assets by 5 to 10 percent in 2014 as the company expects the country's benchmark stock index (IHSG) to rise amid the legislative and presidential elections that are scheduled for April and July 2014. Schroders is optimistic that growth in Southeast Asia's largest economy will accelerate after the hiccup in 2013 when large capital outflows emerged amid international and domestic troubles. Indonesia's GDP growth is estimated to have slowed to 5.7 percent in 2013.
Historically, in the months prior to elections, Indonesian stocks tend to gain and Schroders believes that this trend will continue after the coming elections. Political elections always cause a significant increase in money flows and particularly media companies are expected to benefit financially from election campaigns. However, the winding down of the Federal Reserve's quantitative easing program (which brought cheap US dollars into emerging economies such as Indonesia) and slowing economic growth in China are two important issues that can jeopardize Indonesia's financial stability.
Currently, Schroders Indonesia is the largest fund manager in Indonesia. The company is the local unit of London-listed Schroders, a leading independent international asset management and private banking group. The company has been present in Indonesia since 1991. Michael Tjoajadi, President Director of Schroders Indonesia, said that the Indonesian branch managed about USD $4 billion worth of Indonesian assets by the end of 2013. This is roughly 1 percent of Schroder's total global assets (USD $415.8 billion).
Schroders will introduce three new mutual fund products to increase its Indonesian assets: balanced funds, a combination of equity and bonds; money markets and equity markets. Regarding stocks, it will focus on Indonesia's large cap stocks (accounting for about 60 percent of its equity portfolio) as these stocks are more liquid amid a volatile market.