Pension fund and insurance fund managers do not trust the capital markets in Indonesia and avoid investing in stocks and bonds, a senior government official has said.
Financial Institutions director-general Bambang Subianto on Friday said Indonesian pension fund managers were amassing huge amounts of capital but preferred to channel it to more conservative investments.
'There are perceptions among investors and pension fund managers that they don't feel comfortable with the capital market,' Mr Subianto told a capital markets conference.
Fund managers were concerned about low levels of return, lack of liquidity and the volatility of capital markets, he said.
Indonesian fund managers invested 36.7 trillion rupiah (about HK$121.11 billion) last year, a 24.4 per cent increase on 1995. The funds include life insurance, civil service and military pension funds and private sector funds.
Only 5.3 per cent of those funds was invested in stocks and bonds while 42.8 per cent was allocated to the banking sector.
