Indonesia's Danantara Fund May Intervene in Local Stock Market
Danantara, Indonesia's sovereign wealth fund, may buy local stocks during market stress to secure assets at attractive valuations amid fears of an MSCI downgrade.
The sovereign wealth fund Danantara announced it may intervene in the Indonesian stock market during periods of stress if valuations become attractive. Head of public investment Rani Piputri stated that the fund may step in during crises driven by temporary external sentiments to secure assets at a good price, though she clarified that the goal is not to stabilize the market.
This potential action comes as investors fear a market rout if MSCI downgrades Indonesia's classification from emerging market to frontier status next month. Danantara's public investment arm has already invested approximately $3 billion in stocks and bonds and intends to add another $1 billion by the end of the year.
In a related move to maximize investment returns, managing director Pahala Mansury indicated that a 120 trillion rupiah ($6.7 billion) dividend previously slated for the government may be retained. A final decision on the dividend retention is pending approval from Finance Minister Suahasil. Mansury noted that the fund aims to ensure foreign investors view these actions as contributions to financial deepening and better governance rather than market intervention.
