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Analysts cut forecasts on IDX Composite amid uncertainty
Expectations for the IDX Composite dimmed amid concerns over the incoming government’s policy and uncertainty about the central bank’s interest rate cut.
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Tidy trading: A custodian cleans the floor of the Indonesia Stock Exchange (IDX) building in South Jakarta on April 16, 2024. (Antara/Erlangga Bregas Prakoso)
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ocal and global brokerages are slashing their expectations for the Indonesia Stock Exchange (IDX) Composite amid a deteriorating outlook on companies’ earnings following concerns over the incoming government’s policies and uncertainty over the central bank’s interest rate cut.
Early this year, many brokerages expected the IDX Composite, a benchmark for the country’s stock exchange, to increase to a record high of 8,000 points by the year-end.
Mandiri Sekuritas, the securities arm of state-owned lender Bank Mandiri, had forecast that the index could reach 8,030 in a bullish scenario.
It cited a price-to-earnings (PE) ratio of Indonesian stocks at 15.1 points, much lower than Japan’s 24.5 and India’s 23.5, making it attractive to global investors.
The PE ratio tells investors whether a stock price accurately reflects any company’s earning potential. A low ratio could indicate the price was lower than the company’s actual worth, dubbed undervalued, while a high ratio could indicate overvaluation.
The IDX Composite peaked at around 7,433 in March from last year’s around 7,200, but has been moving sideways since then. It was closed at 7,294 on Friday’s trade, or 1.87 percent below its highest point.
Read also: Banks, commodities poised to drive IDX this year, after poor first quarter
