In this report, we assess the cash position of the funds that we track as of January 2025, and stock insider tracking. Indeed, according to our analysis, funds’ cash positions reached the lowest since Oct-24 at 5.4%. The decline in cash percentage was partly due to redemption/deployment to equity. Key, however, is that the cash percentage was at the lowest in the past five months. Also, our proprietary insider tracker also found some directors/controlling shareholders of some accumulating shares of their own companies’ stock, such as AKRA (Buy) and SIDO (Buy).

We believe the position of locals indicates minimum availability of cash. Hence, any negative event for the market may not be supported by local institutional investors, and this may raise market volatility in the case of a shock event.

AUM drops and lower cash as % of portfolio

Assets under management of the local 60 local institutional investors that we track fell to IDR50.3tn in January 2025, down from IDR51.8tn in December 2024 (-3% m-m). Meanwhile, cash reserves decreased to IDR2.72tn (only 5.4% of portfolio) vs IDR3.2tn in Dec 2024 (was 6.2% of portfolio). The fall-off, we think, was predominantly due to an index decline (JCI fell 1.3% m-m). Another reason could also be market redemptions. As percentage of the portfolio, in aggregate, cash levels were down in January. In our view, domestic investors remain overexposed to consumer FMCG, coals, and banks, but underexposed to metals & mining, oil & gas, and basic materials.

Insider buying signals confidence in select stocks

Our Insider Tracker highlights a strong rebound in insider buying. AKRA’s shareholders resumed buying after a three-months hiatus, bringing total insider holdings to add about ~6% of the company. Likewise, SCMA (Not rated) insiders have been adding stock incrementally, reaching 2.6% ownership, showing confidence in the company's valuation. Other names with high insider accumulation include SIDO, further supporting the notion that corporate insiders perceive undervalued conditions in these names.

Market faces elevated volatility risk

As local institutions cash buffers decline, market sensitivity remains elevated, particularly in the face of external shocks. Foreign investors, however, continue to rotated into high-beta financials, with allocation preferences in favor of BMRI, BBRI, and BBNI, reducing BBCA in the process (all rated Buy). At the same time, increased insider buying in AKRA, SCMA, and SIDO reflects greater confidence among company management in long-term prospects, in our view. We prefer a defensive stance given low cash positions of local investors, and also anticipating key event risk. For investors seeking to hedge, we prefer stocks that are underowned, have less foreign exposure, and also have decent liquidity. Our relative shelter picks include: MIDI, HEAL, TAPG, ACES, SRTG, AUTO, ESSA, HRUM, ERAA, MTEL (all rated Buy).
 

Fig. 1: Accumulated AUM, Cash and Cash position (%)

Fig. 2: Insider Tracker (10-14 Feb 25)

Fig. 4: Sector analysis - locals are overweight on the banks, autos FMCGs, coal, and transport. Note that coal overweight is at one of the highest since 2021

Fig. 5: Foreign ownership is weighing in selected stocks. Significantunderweight on BBRI. Overweight on BBCA, BMRI, CPIN, BRPT, and INKP

Fig. 6: Foreign ownership in JCI – institution ownership (ex-strategic, as % of market cap) is at the lowest since 2011

Fig. 7: Foreign ownership in top 4 banks – BBCA is still elevated while BBRI is at one of the lowest since 2021

Fig. 8: Company insiders – including controlling shareholders and directors – have started buying back AKRA stock. The buyback has now reached 6% of the company’s total shares in just four years

Fig. 9: Company insiders – including controlling shareholders and directors – have started buying back SCMA stock. The buyback has now reached 2.6% of the company’s total shares

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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ANALYST CERTIFICATION
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Nicholas Goei (nicholas.goei@verdhana.id)

David Tjahjadi (david.tjahjadi@verdhana.id)

Jupriadi Tan (jupriadi.tan@verdhana.id)

Gerald Hugo (gerald.hugo@verdhana.id)