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No equity 'bubble' in Indonesia, for now
Amid concern about equity bubbles about to pop in Europe and the United States, Indonesia’s stock market has barely appreciated this year as the country lags behind in its economic recovery.
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A price chart is displayed on a smartphone in this undated photo. The Indonesia Stock Exchange (IDX) is trying to woo big tech start-ups by allowing them to use SPACs and conduct dual-class listings, both hot topics among tech start-ups worldwide. (Antara/M Risyal Hidayat)
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nalysts consider Indonesia relatively safe from an equity bubble, bucking a trend seen in western economies, as the country lags behind in its economic recovery.
The Indonesia Composite index, the main gauge of the Indonesia Stock Exchange (IDX), closed at 6,090.93 points on Wednesday, up only 1.8 percent from where it began the year and down 3.3 percent from the price seen at the end of 2019, before the pandemic began to make worldwide headlines.
By contrast, the main indices representing the United States stock market, the Nasdaq Composite, the S&P 500 and the Dow Jones, have gained between 16.5 and 27 percent so far this year, and all have far surpassed their pre-pandemic levels. Leading the pack, the tech index Nasdaq was trading on Wednesday at a whopping 70.6 percent above its 2019 close.
The pan-European STOXX 600 index has gained 17.5 percent this year and closed on Wednesday 13.7 percent above the pre-pandemic level, while Germany's DAX also made the effect of the virus all but forgotten, trading up just shy of 20 percent from the pre-pandemic level.
All this stands in stark contrast to the decline in prices seen over the pandemic period in Indonesian stocks.
“At this rate, [Indonesia] is still far from a [capital market] bubble risk. Instead, some of our stocks are undervalued,” Central Capital Futures analyst Wahyu Tri Laksono told The Jakarta Post on Tuesday.
Read also: Another dot-com bubble?
