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JCI slumps by nearly 5 percent after Trump seals victory
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Sluggish: The shadows of people are reflected on a Jakarta Composite Index (JCI) board at the Mandiri Plaza in Jakarta on Sept. 23. (Antara/Rosa Panggabean)
T
en days after Republican candidate Donald Trump won the United States presidential election, the Jakarta Composite Index (JCI) was down by 4.51 percent on Friday compared to that on voting day, a result analysts attributed to the so-called "Trump Effect", the US Federal Reserve’s imminent benchmark rate hike and domestic political turmoil.
The JCI, which is the benchmark of the Indonesia Stock Exchange (IDX), closed at 5,170.11 on Friday. On Nov. 9 (Nov. 8 American time), the index closed the day at 5,414 points, a depreciation of 1.03 percent from figures at its close the day before, as it responded negatively to the imminent victory of Trump, who has been campaigning for protectionist trade policies.
State investment company Danareksa analyst Lucky Bayu Purnomo said Trump's planned fiscal expansion, which would push up the US benchmark rate, had triggered capital outflow from emerging markets as investors are seeing opportunities to make better yields.
He added that the “Trump Effect” had actually eased earlier this week but a statement from Fed chair Janet Yellen on Friday (Thursday, US time) about the possibility of the Fed increasing its rates in December brought negative sentiment back to the markets.
“After being hit with the Trump Effect, we expect Yellen to hold off the plan at least until after Trump announces his Cabinet members to give the market a chance to 'breathe',” Lucky told The Jakarta Post on Friday.
The Fed's next board meeting is scheduled for Dec. 13 to 14.
Lucky also pointed out that the large-scale rally on Nov. 4 in front of the State Palace, which turned violent, was another factor that had negatively affected the markets. Some investors, he said, had begun to worry if other large-scale demonstrations would emerge and cause political instability.
(Read also: IDX calms investors)
Earlier this week, IDX president director Tito Sulistio admitted there was a “Trump effect” in the local market that had caused uncertainty among investors. However, they should not join the rout because the financial fundamentals of publicly listed companies remain positive for future growth.
“All of the shares are fundamentally good […] and our companies still see good income,” Tito said. (hwa)
Editor's note: The title and first paragraph in this article have been corrected.
