PT Jamsostek, Indonesia's biggest pension fund, said the nation's benchmark stock index will extend losses, providing an opportunity to boost equity holdings amid optimism about the country's economic growth.
There will be short-term volatility and further declines in the Jakarta Composite index, which lost as much as 12% after reaching a record on May 20, before the market resumes its climb, Jamsostek President Director Elvyn Masassya said in an interview on Monday. The gauge will reach about 5,000 at the end of 2013, Mr. Masassya said, compared with 4,806.66 on Wednesday.
Jamsostek, based in Surabaya, plans to boost its investment allocation for stocks to between 20% and 25% over the next five years, from 18% to 22% currently, Mr. Masassya said. Investments would focus on stocks that will benefit from infrastructure projects, he said, declining to identify specific companies.
The pension fund will also boost direct investments into government-backed infrastructure projects, Mr. Masassya said. This would double the pension fund's allotment for direct investments to 10% of total assets, he said.
“We expect that we can increase our allocation in direct investment, especially for infrastructure,” Mr. Masassya said. “The demand for infrastructure funds is still huge in Indonesia, such as for power plants, toll road, seaports and airports.”
Indonesia plans to boost spending to support growth. Southeast Asia's largest economy is forecast to expand 6.3% this year, according to the government. That rate is almost three times the 2.2% pace estimated for the global economy by analysts surveyed by Bloomberg.
Jamsostek's investments in equities returned 33.5% in the first five months of 2013, outpacing the 17% gain in the benchmark index, Mr. Masassya said.
Jamsostek expects to more than triple its assets to 473 trillion rupiah ($47.8 billion) in the coming five years as more workers start contributing to the pension fund, Mr. Masassya said. This means assets will increase by 25% to 27% each year, he said.