Dear Simpan Client,
August brought a strong recovery in Indonesian equities, with the IHSG rising 4.64% as political and policy uncertainty began to ease. Across AMP, Risk Levels 2 through 5 benefited from the equity rebound, while Risk Level 1 delivered a more modest positive return from its defensive positioning. We entered the month cautiously, but as conditions stabilized, we gradually increased risk and raised equity allocations across the higher-risk portfolios.
Here’s what moved the market in August, how our portfolios performed, and how we are positioned heading into September.
Market Highlights
IHSG +4.64%: Indonesian equities rebounded strongly in August after the volatility seen earlier in the year.
Bank Indonesia leadership transition: Following Perry Warjiyo’s resignation, Bank Indonesia operated without a permanent Governor, leaving monetary policy direction a key source of uncertainty during the month.
Political uncertainty eased: Concerns around large-scale demonstrations and political developments that circulated earlier in the month subsided, allowing investor sentiment to recover.
Government bonds rallied: Government bond yields fell across the curve, supporting fixed-income returns, although our defensive positioning at the start of August limited participation in the rally.
How Did AMP Perform?
Risk Level 1 returned 0.95% in August. With the portfolio positioned defensively through higher cash exposure at the start of the month, it participated less in the government bond rally as yields fell across the curve.
Risk Levels 2 through 5 returned between 1.43% and 2.71%, broadly scaling with their equity exposure as the IHSG gained 4.64%. Because we had reduced equity exposure across these portfolios entering August, each participated in the recovery with less exposure than its strategic allocation.
As the risks that prompted our defensive positioning subsided, we became more constructive. We raised equity allocations across Risk Levels 2 through 5, taking Risk Levels 4 and 5 above their strategic equity weights. In Risk Level 1, we increased cash and reduced bond exposure following August’s bond gains, as we believe much of the price appreciation has now been realized and want to reduce duration risk.
Key Trades of the Month
Mining – Precious Metals: We re-entered Merdeka Gold Resources (EMAS) as the company enters its gold production phase, which we expect to become an increasingly important driver of financial performance. The move was also supported by a sharp rise in gold prices after a prolonged period of sideways trading.
Energy – Oil & Gas: While oil prices remained volatile amid geopolitical tensions, Raharja Energi Cepu (RATU) continued to benefit from the environment. However, with the stock under pressure, we reduced our position and began exploring other opportunities with stronger momentum.
Outlook & Positioning for September
We enter September with a more constructive view on Indonesian equities following August’s recovery. After reducing exposure into the uncertainty at the beginning of August, we have now increased equity allocations across Risk Levels 2 through 5 as market conditions have stabilized.
We remain selective, however. The recovery has not fully resolved the underlying policy and fiscal uncertainties, so we continue to favor opportunities where company fundamentals and earnings momentum can provide a clearer catalyst.
In fixed income, we have become more cautious following August’s rally. With much of the bond price appreciation already realized, Risk Level 1 is positioned with higher cash and lower duration as we wait for greater clarity on the direction of monetary policy.
Key watchpoints for September: the direction of Bank Indonesia’s monetary policy under its new leadership, foreign flows into Indonesian equities, and whether the recent market recovery can broaden beyond the sectors that have led the rebound.
We thank you, as always, for your continued trust and confidence.
— Simpan Asset Management
Disclaimer: Investments in the fund products contain investment risk. Historical returns do not guarantee future returns. Every prospective investor is required to read and understand the terms and conditions of the prospectus or investment guidelines of each fund product, including the risks mentioned above.