T

he Indonesia Stock Exchange (IDX) has become more positive about the local stock market after last week'€™s gain that reversed the bourse'€™s previous steep drop.

The Jakarta Composite Index (JCI) '€” the main price barometer at the local stock exchange '€” last week made its biggest weekly gain in nearly five months: 1.88 percent to 5,182 on Friday, thanks to positive global sentiments. It was also the best performing index among regional indexes last week.

IDX president director Ito Warsito said the stock market'€™s weekly performance showed that the massive foreign net sales had now ended after the 6.42 percent slump in the previous week. It is now time for the index to rebound, he added.

'€œThe possibility of bigger foreign net sales has now passed and the market will hopefully remain stable now,'€ Ito told reporters on Friday.

But analysts still warned investors to remain cautious this week as the index is expected to remain volatile through the first half of the year as the market is still waiting for certainty on the government'€™s infrastructure projects and realization of plans to boost the domestic economy.

Around Rp 21.63 trillion (US$1.65 billion) in foreign capital exited the stock market during the last week of April, with a total of Rp 7.09 trillion in foreign net sales, following disappointing first-quarter (Q1) corporate earnings results and investors anxieties over the country'€™s Q1 economic growth data.

Last week the Central Statistics Agency (BPS) reported that Indonesia'€™s economic growth was only 4.7 percent in the first quarter this year, the slowest in six years and since the global financial crisis.

'€œNow that the slowdown is officially announced, the rallying JCI is mostly influenced by positive sentiments in the global market and how the government has pledged to face the slowdown,'€ Desmon Silitonga from Millennium Capital Management said.

Foreign investors recorded Rp 84 billion in net sales last week, a significant improvement compared with the previous week.

Bond and stock markets worldwide rose on Friday after a bruising week and sterling surged to a two-month high after the business-friendly Conservative party won Britain'€™s parliamentary election, Reuters reported. MSCI'€™s emerging market index for Asia-Pacific shares outside Japan rose 0.5 percent as it recovered from a one-month low.

'€œThe President [Joko '€œJokowi'€ Widodo] has also pledged to precipitate state budget spending and to hasten infrastructure growth in coping with the economic slowdown, and this is good news investors wanted to hear,'€ Desmon went on saying.

The International Monetary Fund (IMF) expected Indonesia to grow at around 5.2 percent this year, lower than the government'€™s 5.7 percent target. But growth of more than 5 percent, according to Desmon, was still high relative to other countries in the world during the current sluggish global economic recovery.

Hence, investors are still betting on the country, as proven by more than Rp 10 trillion net buys in the stock market since January, he added.

'€œBut still, the stock market is expected to remain volatile next week until the end of the first half, as investors are still waiting for Jokowi to carry out his plan. Weak currency will also play a part in determining the market,'€ Desmon explained, predicting that the index will hover between 5,100 and 5,250 next week.