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JCI nears 3,600 as rally continues
The price rally continued in the Indonesian Stock Exchange (IDX) on Monday, helping the benchmark Jakarta Composite Index (JCI) to score another new historic high, amid concerns that the ongoing influx of foreign funds may cause a bubble in the market
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he price rally continued in the Indonesian Stock Exchange (IDX) on Monday, helping the benchmark Jakarta Composite Index (JCI) to score another new historic high, amid concerns that the ongoing influx of foreign funds may cause a bubble in the market.
The JCI rose an eighth consecutive day to close at 3,569.5, the highest level it has ever achieved in the nation’s stock market history.
The trading volume was relatively heavy, with 6.5 billion shares changing hands at a total transaction value of Rp 5.77 trillion (US$638.4 million).
Still, the foreign capital inflow remained the main price driver. During the day, foreign investors bought a total of Rp 1.75 trillion and sold at a total of Rp 1.72 trillion, leaving a net foreign purchase of Rp 30 billion. The country’s stock market has outperformed other major global indexes, rising almost 40 percent so far this year. The US Dow Jones gained 2.3 percent year-to-date, while London’s Financial Times 100 index only rose less than 1 percent. In Asia, Tokyo’s Nikkei slumped 12 percent throughout the year, Hong-kong’s Hang Seng rose 3.6 percent and neighboring Singapore’s Straits Times index has gained 9 percent so far this year.
The rupiah traded near its highest level since June 2007 at 8,926 per dollar as of 3:48 p.m. in Jakarta, compared with 8,923 at the end of last week.
The currency has gained 5.2 percent so far this year as stock and bond investors boosted their holdings of Indonesian assets to take advantage of growth in Southeast Asia’s largest economy.
Analysts have said that the influx of foreign funds reflected the growing confidence of foreign investors on the country’s economy. Although analysts said that the current foreign capital was still manageable, they warned that the massive inflow of foreign funds could also pose a risk of overheating and run-up of share prices, which could subsequently cause outflows and price busts.
IDX director Eddy Sugito, voicing a similar assessment with the analysts, recently said that although foreign inflow was relatively high, he believed their presence did not yet have cause for concern. “So unless, God forbid, something terrible happens to Indonesia’s fundamentals, the rally may be sustainable,” he added.
Eddy, who forecast this year’s overall Initial Public Offerings (IPOs) would raise more than Rp 20 trillion, estimated the rally would continue at least until the end of the year, as the increase in the number of new listings would further attract not only foreign but local investors.
Twelve companies have launched IPOs so far this year, including coal mining firm Berau Coal Energy, oil and gas firm Benakat Petroleum Energy, regional development bank, Bank Jabar Banten and two telecommunications-related firms, Skybee and Sarana Menara Nusantara.
A dozen more firms have also signaled a firm commitment to list their shares in the stock exchange before the end of the year including state-owned steel-maker Krakatau Steel, a unit of the country’s biggest food producer, Indofood CBP, property firm Agung Podomoro and coal mining firm Harum Energy.
Monday’s price rally led increases in prices of several blue chips including Bank Rakyat Indonesia (BBRI), Bank Mandiri (BMRI) and the nation’s largest automotive seller Astra International (ASII). (est)
