Jakarta index rebounds to 4,000 level

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We want your involvement: A customer service officer talks to an investor during the initial public offering (IPO) of Bank Pembangunan Daerah Jawa Timur (Bank Jatim) in their Jakarta branch on Tuesday, when the Jakarta Composite Index reached 4,030.93, breaking the 4,000-psychological mark for the first time since it fell to this year’s low of 3,654 on June 4. Bank Jatim, headquartered in East Java, released 2.98 billion shares, or 20 percent of its enlarged capital, at Rp 430 (4.55 US cents) apiece during its IPO.(Antara/Rosa Panggabean)

Indonesian shares joined the rally on the global market on Tuesday following expectations that major central banks would ease their monetary policies to support their economies.

The Jakarta Composite Index, the main price indicator at the Indonesian Stock Exchange (IDX), rebounded to break the 4,000-psychological mark for the first time since it fell to this year’s low of 3,654 on June 4. The index gained 0.98 percent to close at 4,030.93 in active trading.

“The JCI’s gain was in line with growth in the regional markets along with the expectation that the European Central Bank would cut its interest rate and the US would take measures after the manufacturing sector started to show a slowdown,” M. Alfatih of Samuel Sekuritas Indonesia said.

The European Central Bank is expected to cut its interest rate by 25 basis points to 0.75 percent while the US is expected to carry out monetary stimulus in response to the slowdown in the manufacture
sector.

Alfatih said that consumer and banking stocks contributed to the index’s gain on Tuesday.

“There is room for the index to gain further. It may move between 4,080 and 4,150 this week. Sentiments on Europe will remain and there is also concern about the country’s economic growth, particularly exports and imports,” Alfatih said.

Edwin Sebayang of MNC Securities said that the JCI’s gain was also supported by foreign investors
reentering the market.

According to IDX figures, foreign investors made net purchases of Rp 684 billion (US$72.5 million) on Tuesday. Stocks heavily purchased by foreign investors were PT Bank Rakyat Indonesia, PT Astra International, PT Bank Negara Indonesia, PT Bank Central Asia, PT United Tractors and PT Telekomunikasi Indonesia.

IDX president director Ito Warsito said purchases so far this year had reached Rp 2 trillion in the secondary market.

“Foreign investors still put trust in Indonesia due to companies’ good performance. The bourse is optimistic that the situation will get better in the second semester as the Europe situation improves,” Ito said.

Meanwhile, the rupiah also strengthened on speculation that central banks in the world’s largest economies would ease their monetary policies, improving Indonesia’s export prospects. Government bonds were little changed, Bloomberg reported on Tuesday.

China should lower lenders’ reserve ratios, the China Securities Journal reported today, while 51 of 62 analysts surveyed by Bloomberg forecast that the European Central Bank would cut its benchmark interest rate on July 5. Indonesia expects its trade balance to return to a surplus for June, Deputy Trade Minister Bayu Krisnamurthi said in Jakarta on Tuesday, after the country posted its second consecutive monthly shortfall for May on Monday as exports fell 8.6 percent from a year earlier.

“It is hoped that global demand will improve due to easier credit from China, boosting exports from commodity producers like Indonesia,” said Mika Martumpal, a currency analyst at PT Bank CIMB Niaga in Jakarta. “An improving current-account condition will support the rupiah.”

The rupiah strengthened 0.2 percent to 9,363 per US dollar as of 4:58 p.m. in Jakarta, according to prices from local banks compiled by Bloomberg. The currency dropped as much as 0.8 percent earlier. One month implied volatility, which measures exchange-rate swings used to price options, held at 8.5 percent.

The yield on the government’s 7 percent bonds due May 2022 was steady at 6.09 percent, according to closing prices from the Inter Dealer Market Association.

— JP/Raras Cahyafitri