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Global, not local, worries may hit Jakarta Composite Index
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Loads of cars are set to leave Astra Daihatsu Motor's assembly plant in Karawang, West Java on August 24. ( Antara/ Rivan Awal Lingga)
T
he Jakarta Composite Index (JCI), the Indonesia Stock Exchange (IDX) benchmark, is expected to trade lower on Monday, dragged down by negative global sentiment rather than investors’ concerns over Indonesia’s politics and security following a rally that turned violent on Friday, analysts have said.
The JCI closed at 5,362 on Friday from its previous close of 5,329 on Thursday, its lowest position since late September.
Trading was sluggish at the beginning over worries about the rally, but the index finally rebounded in the second trading session as domestic investors took advantage of oversold stocks.
Meanwhile, the rupiah strengthened by seven points and closed at 13,068 per US dollar on Friday.
Even if the index trades between 5,320 and 5,400 on Monday, the causes will mainly stem from the global situation rather than domestic concerns, said First Asia Capital analyst David Sutyanto on Sunday.
It is thought last week’s protests will have little impact on the country’s economy as the protesters’ demands were not related to the economy.
“The market’s attention is focused on the US presidential election, the results of which will only be known on Wednesday [Jakarta time],” he said.
Almost all bourses across the globe ended down on Friday amid rising uncertainty over the election’s results. The election will take place on Nov. 8.
The JCI’s highest trading point this year occurred on Oct. 3, when it reached 5,463.91, with its highest peak ever being 5,514.78 on March 3, 2015, according to Bloomberg.
Samuel Asset Management economist Lana Soelistianingsih expressed similar views.
“The announcement of third quarter GDP growth on Monday could ease potential index corrections, if the GDP result is above 5 percent,” Lana said in a text message.
The government and Bank Indonesia have previously hinted at a lower result, below the 5.1 percent recorded in the second quarter.
Economists have forecast various figures from 5 percent and above. Singapore-based DBS Bank economist Gundy Cahyadi expects growth to remain at around 5 percent, in line with consumer-spending growth. Meanwhile, Moody’s Analytics predicts that the economy will have expanded by 5.3 percent in the third quarter on the back of an investment pickup, in addition to strong private investment and government spending.
Separately, Bahana Securities research head Harry Su said that investors should see the situation positively.
“[The] market might come off Monday with the rupiah likely to weaken, but we maintain our view that it should be used as a buying opportunity.”
“[President Joko Widodo] Jokowi was very firm last night [Friday night] in his presidential speech. I’m proud of him. Indirectly he said no compromise. Just follow the law. Anarchy will not be tolerated,” he wrote in a text message on Saturday.
Harry said he was certain the current administration, fully backed by both the police and the military, would continue to handle the situation well, unlike in the riots of 1998.
Separately, Danareksa analyst Lucky Bayu Purnomo predicted that the JCI’s movements would be limited to between 5,345 and 5,400 over the next two weeks.
