Foreign investor sell-off in banks continues

We used KSEI data to calculate the percentage of foreign holdings in stocks. We found that, in March, foreign ownership in banks continued to decline, most noticeably in BBNI (-5.4% m-m, -6.7% y-y). BMRI (-2.4% m-m, -4.7% y-y) witnessed the second-largest outflow, followed by BBRI (-1.5% m-m, -17.6% y-y) and BBCA (-1.3% m-m, -2.4% y-y). This resulted in a net outflow of nearly IDR8.4tn from these four banks – IDR3.5tn outflow from BBCA, IDR1.0tn from BBRI, IDR1.9tn from BMRI, and IDR1.9tn from BBNI.

Despite a decreased foreign ownership in absolute terms, foreign investor shareholding in BBRI and BMRI increased relative to other Indonesian banks mainly due to greater share price appreciation vs peers in March. BMRI’s foreign investor weighting increased from 11.66% to 12.46%, while BBRI’s weighting increased from 12.17% to 14.23%. On the other side, BBCA recorded the most decline in relative foreign ownership.

Local investors add banks to their position

Local investors have taken this opportunity to accumulate the large banks by increasing the amount of shares held. Local investors increased their holdings of BBCA to 7,651mn shares (+7.4% m-m, +18.4% y-y), of BBRI to 20,875mn shares (+1.9% m-m, +76.5% y-y), of BMRI to 12,874mn shares (+4.7% m-m, +13.0% y-y) and of BBNI to 3,713mn shares (+10.4% m-m, +27.9% y-y). This resulted in an increase in weighting of BBRI, BMRI, and BBNI by 1.84%, 0.95% and 0.4%, respectively.

Overweight/underweight of sectors and stocks

When benchmarked to the JCI, we note domestic investors are overweight in Banking, Telco, Auto, FMCG, and Coal sectors, and underweight in O&G, Basic Materials, and Metals & Mining sectors. On the foreign investors side, when benchmarked to the MSCI index, foreign investors are underweight in every stock except for BMRI. 

Bullish on oversold banks, BBNI and BMRI

We think that the sell-off in banking stocks by foreign investors is likely to slow down in the coming months. There could be a potential outflow from US investors in Chinese equities, some of which may trickle down to Indonesian equities, primarily to the big 4 Indonesia banks. We favor BBNI and BMRI, which foreign investors sold off the most in March.

Fig. 1: Foreign shareholding # in big 4 banks

Fig. 3: Local Investors OW/UW levels grouped by sector

Fig. 4: Foreign investors OW/UW levels grouped by stock (MSCI stocks only)

Fig. 5: Foreign equity inflow – cumulative 2024 YTD (USD bn)

Fig. 6: MSCI Indonesia

Fig. 7: Big 4 banks foreign investor flow (IDR tn) – Cumulative

Fig. 8: Foreign institutional investment – Nominal and as % of JCI market cap

Fig. 9: Bank outflows in March (IDR tn)

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Nicholas Goei (nicholas.goei@verdhana.id)

Jupriadi Tan (jupriadi.tan@verdhana.id)

Gerald Hugo (gerald.hugo@verdhana.id)

David Tjahjadi (david.tjahjadi@verdhana.id)