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JCI may reach 5,450 level this year: Analyst
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Mandiri Sekuritas president director Silvano Rumantir (left) and Aberdeen Asset Management president director Sigit Pratama Wiryadi pose for a photo during the signing of a memorandum of understanding on joint-mutual fund sales in Jakarta on Oct. 4, 2016. (JP/Anton Hermansyah)
T
he Jakarta Composite Index (JCI) is predicted to reach 5,450 by the end of 2016 amid the tax amnesty program, attractive market returns and optimism over the credibility of the government's economic team.
The Indonesian market is also attractive with an average return on equity (ROE) of 16 percent, the highest among Asian markets. The success of the tax amnesty and the government’s new economic team, led by world-class economist Sri Mulyani Indrawati, had also boosted market optimism, said Mandiri Sekuritas president director Silvano Rumantir.
"The tax amnesty gives Indonesia significant liquidity. As the Fed delays plans to increase its interest rate, we have room to grow because investors will not revoke their assets from emerging markets quickly," he said during the signing of a memorandum of understanding between Aberdeen Asset Management and Mandiri Sekuritas in Jakarta on Tuesday, referring to the US Federal Reserve.
The JCI reached a year-to-date high of 5,482 on Monday. Silvano expressed optimism that repatriated assets from the tax amnesty could create an adequate buffer against potential capital outflow.
"The repatriated assets will be used to buy capital market instruments and will balance the portion of domestic investors to foreign investors in the market," he added.
Mandiri Sekuritas has predicted the JCI will touch a psychological level of 6,000 at the end of 2017 as long as the government can maintain market optimism with tax reforms. (ags)
