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JCI likely to stay above 3,000 despite profit taking
The Indonesian Stock Exchange (IDX) may face a correction this week as investors look likely take a profit taking following significant gains last week
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he Indonesian Stock Exchange (IDX) may face a correction this week as investors look likely take a profit taking following significant gains last week.
Securities analysts say the Jakarta Composite Index (JCI), which passed the 3,000 psychological barrier Wednesday, would be under slight pressure due to profit taking on some heavyweight shares.
However, analysts say they believed the index would still maintain above 3,000 as better than expected first-quarter reports of several companies would further push up share prices.
"The real test will be in the first week of August as plenty of financial data will be announced by then," CIMB analyst Erwan Teguh said, referring to upcoming corporate financial reports and the Central Statistics Agency's announcement on July's inflation rate. "Prices could also drop if the inflation is higher than estimated," he said.
The central bank said last week that July inflation rate would be higher than the previous month.Nico Omer Jonckheere, vice president of research at Valbury Asia Futures, forecast the Jakarta Composite Index to continue moving within a range between 3,000 and 3,100 this week.
He estimated that the projected increase in the price of shares in PT Bank Jabar Banten Tbk (BJBR), PT Bank Negara Indonesia (BBNI), PT Indocement Tunggal Perkasa Tbk (INTP), PT United Tractors Tbk (UNTR) and PT Mayora Indah Tbk (MYOR) could bring the index to a new high to close to 3,100.The composite index climbed 1.06 percent or 32 points to close the week at 3,042.
Standard Chartered senior economist Fauzi Ichsan said there would be plenty of profit-taking in the upcoming one to two weeks, following the jump."In the long run, however, the index will climb to at least 3,200 by yearend," Fauzi added, citing the country's firm economic conditions as the main factor.
Finance Minister Agus Martowardojo recently raised Indonesia's economic growth (GDP) forecast to 5.9 percent from the previous 5.8, due to strong optimism that the country's second-half growth would stand at 6 percent, after the first-half's 5.8 percent.
"Investors should be careful with the index jump, though, because there's always a possibility of corrections following a huge jump in the stock market," Purbaya Yudhi Sadewa, Danareksa Research Institute chief researcher, said.
Analysts estimate bullish trading would continue on commodities stocks, which would likely be the main contributing factors for a possible surge in the index this week.
Erwan said positive financial reports in the US and better overall global economic conditions would bring share prices in the commodities sector up as demand would surge and prices increase.Indonesia is the world's largest exporter of crude palm oil and produces a significant number of other commodities, including tin, rubber, nickel, rice, cocoa, coffee and sugar. (est)
