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Jokowi factor will extend price rally: Mansek
The price rally on the Indonesian Stock Exchange (IDX) will likely continue as the nomination of Jakarta governor as a presidential candidate in the July election will further help extend the buying spree, analysts say
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The price rally on the Indonesian Stock Exchange (IDX) will likely continue as the nomination of Jakarta governor as a presidential candidate in the July election will further help extend the buying spree, analysts say.
Mandiri Sekuritas (Mansek) equity research and strategy head John Daniel Rachmat said in Jakarta on Monday that he believed the naming of the popular Jakarta governor as a candidate would drive up buying not only by local but also foreign investors.
'Some fund managers said earlier this year that they would take a 'wait-and-see' approach, but everything has become much clearer because of the announcement and now is the time for them to enter,' he said at a media briefing.
On Friday, Jakarta Governor Joko 'Jokowi' Widodo, an Indonesian Democratic Party of Struggle (PDI-P) member, was named by PDI-P chairwoman Megawati Soekarnoputri as the party's candidate for the July presidential election.
Jokowi served as mayor of Surakarta, Central Java, from 2005 until he was elected Jakarta governor in 2012.
News of his candidacy led to the Jakarta Composite Index (JCI), the main benchmark of the IDX, surging to 4.787.64 on Friday, jumping 3.2 percent from the previous day. It was its best performance so far this year and the bourse recorded as much as Rp 7.48 billion (US$662,386) in net buying that day. The index closed almost unchanged at 4,876.19 on Monday.
John said that Mansek envisioned three scenarios ' 'bearish', 'base' and 'bullish' ' for this year, but said that the situation would most likely become 'base' or 'bullish' only, now that the 'market-friendly' presidential aspirant's candidacy had been announced.
Under the 'base' scenario, Mansek estimates that the economy will grow 5.6 percent and that the JCI will reach 4,550 by year-end. 'However, the JCI surpassed that benchmark in February. It is only if our GDP [gross domestic product] slows down that the JCI will fall,' he said.
Meanwhile, according to the 'bullish' scenario, Indonesia would post 6 percent growth in its GDP and see the JCI climb to 5,550.
In both scenarios, the JCI would far exceed the 4,274.18 recorded on Dec. 30, 2013.
John also said that he strongly believed Indonesia's GDP would rise to 6 percent this year, up from 5.8 percent in 2013, supported by higher private consumption, increasing foreign direct investment and thriving exports.
'Election years always trigger higher private consumption with money circulating and we expect businesspeople to start spending their investment funds in the second quarter after the political climate becomes clearer,' he said.
And with a rebound in the price of crude palm oil, Indonesia will also see better revenues from exports of the commodity, John said.
Commenting on the JCI, which ended in the red on Monday, down 0.05 percent from Friday, he said the decline was only temporary and that it would rebound soon.
Meanwhile, the rupiah rose to a 19-week high after foreign funds pumped money into local stocks following the announcement of Jokowi's candidacy.
Bloomberg reported that overseas investors added $656 million to holdings of Indonesian equities, the most since May 2013, on March 14 after the PDI-P announcement.
The rupiah strengthened 0.6 percent to close at 11,293 per dollar, prices from local banks show. It reached 11,254 earlier, the highest level since Oct. 31. In the offshore market, one-month non-deliverable forwards advanced 0.1 percent to 11,329 per dollar, trading 0.3 percent weaker than the onshore rate, data compiled by Bloomberg show.
