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Jakarta Post

Political sentiments drive JCI above 5,000 for first time in 2014

  • Tassia Sipahutar

    The Jakarta Post

Jakarta   /   Sat, May 17, 2014   /  11:24 am

Political sentiments over the elections drove the Jakarta Composite Index (JCI) '€” the main benchmark of the Indonesia Stock Exchange (IDX) '€” to surpass the psychological benchmark of 5,000 on Friday, the first time in 2014.

The JCI opened at 4,982.29 on Friday morning and quickly rose to 5,001.19 during the first trading session. It continued to climb throughout the day and reached its peak of 5,031.57 at the last minute.

The JCI closed 0.8 percent higher from Wednesday and the IDX became one of the few regional bourses '€” besides Thailand'€™s SET Index and Malaysia'€™s FTSE BM '€” that ended in the green, while Singapore'€™s FTSE ST and the Philippines'€™ PSE Index ended in the red.

Valbury Asia Securities research division vice president Nico Omer Jonckheere said the surge was mainly driven by the current political situation becoming much clearer.

'€œInvestors like it that the options [for president] have narrowed down to two candidates. That provides higher certainty about the future,'€ he said.

Nico added that the elections would most likely only last one round with potentially two candidates; Joko '€œJokowi'€ Widodo from the Indonesian Democratic Party of Struggle (PDI-P) and Prabowo Subianto from the Gerindra Party. He said that the net-buy figure recorded on Friday was proof of investors'€™ contentment.

According to statistics published by the IDX, the bourse saw foreign investors book around Rp 2.1 trillion (US$184 million) in net buy during the day, up from Rp 1.26 trillion posted on Wednesday.

The shares of telecommunication firm Telekomunikasi Indonesia (TLKM), lenders Bank Mandiri (BMRI) and Bank Rakyat Indonesia (BBRI), diversified conglomerate Astra International (ASII) and telecommunication operator XL Axiata (EXCL) were recorded as the top five daily movers.

Meanwhile, the shares of mining company Vale Indonesia (INCO), heavy equipment distributor United Tractors (UNTR) and telecommunication tower operator Sarana Menara Nusantara (TOWR) were among those that dragged the JCI down.

This was the second time the JCI was able to break the benchmark after it reached 5,214.98 on May 20, 2013, but it spiraled a few days later following news that The US Federal Reserve would cut down its stimulus package. The JCI hit the bottom on Aug. 27, 2013, when it touched 3,967.84.

Recapital Securities analyst Akhmad Nurcahyadi echoed Nico, saying that political sentiments had attracted the capital inflow, dubbed '€œhot money'€. '€œHowever, I estimate that the JCI will be corrected next Monday because investors expected Jokowi to announce his running mate today [Friday], but it turned out that he would announce it on May 20,'€ he said.

Separately, Finance Minister Chatib Basri said current data on the US economy was one of the reasons behind the positive movement. '€œThe data is not as good as expected and that boosted capital inflow,'€ he said as quoted by Antara.

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