T

he Jakarta Composite Index (JCI), the main benchmark of the Indonesia Stock Exchange (IDX), stands a chance to continue rallying as investors’ positive sentiments over the country are expected to persist.

According to Ashmore Asset Management Indonesia, the JCI can still maintain its positive trend even after the United States’ Federal Reserve raised its interest rates on March 15.

As many as US$542 million capital inflows have entered Indonesia since the Fed’s rate increase, but only a small portion of them have been invested in the capital market, meaning that more funds will come, as was said in a research note.

The JCI increased 0.5 percent throughout last week and closed at 5,567.13 on Friday, the same day the index reached an all-time high at 5,581.18 during morning trade.

The increase was supported by the second-tier stocks with low market capitalization, while the prime stock index LQ45 only increased by 0.4 percent last week.

Foreign investors recorded a net buy of Rp 2.84 trillion ($213.07 million) in the stock market last week, while in the bond market, the investors also made a $1.2 billion purchase.

Many analysts said the movement was supported by good prospects of the Indonesian economy.

“Indonesian economic prospects are promising, and its trade is not affected by the uncertainty related to [US President] Donald Trump, which investors avoid,” FXTM research analyst Lukman Otunuga wrote.

In terms of trade, Indonesia’s exports rose by almost 20 percent annually to $25.98 billion in the January to February period, bringing the trade surplus to $2.75 billion.

Finance Minister Sri Mulyani Indrawati previously stated that it was possible to achieve higher economic growth of 5.2 percent compared to the 5.1 percent target contained in the 2017 state budget.

The government predicts investments will pick up this year as most banks have already restructured their bad loans.

Reliance Securities research head Robertus Yanuar Hardy said that investors had positive expectations that Indonesia would secure a rating upgrade from global rating agency Standard & Poor’s (S&P) Global Ratings.

S&P analysts met with top officials last week, namely Sri Mulyani, Coordinating Economic Minister Darmin Nasution and Bank Indonesia’s (BI) officials.

“The S&P is under pressure to upgrade Indonesia’s rating as other [rating agencies], Fitch Ratings and Moody’s Investors Service have already changed their outlook for Indonesia from stable to positive,” Robertus said.

Separately, BI also voiced its optimism that global investors would continue to voice a positive “vote of confidence” on Indonesia despite the lack of upgrade from S&P.

The positive sentiment was already reflected through ongoing capital inflows and from the oversubscription of Indonesia’s recent global sukuk (Islamic bond) issuance, said BI senior deputy governor Mirza Adityaswara on Friday.

Mirza played down concerns that Indonesia’s investment climate would be affected, adding that S&P was not the only institution analyzing Indonesia.