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Twin deficits hamper IDX growth, says analyst
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The Indonesia Stock Exchange's trading floor (JP/Wienda Parwitasari)
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securities analyst has said that the Indonesian bourse was not as attractive as those in Malaysia and Thailand, because of this year's twin current account and trade deficits that hampered the country.
Lot services head Krishna Dwi Setiawan of securities firm PT Lotus Sekuritas said that the correction of the Jakarta Composite Index (JCI) had been prompted by negative sentiment over the rupiah depreciation and the increase in global crude prices, and would force net sells by foreign investors.
“Actually, our market has been much stronger in the last three years because of the growing role of domestic investors, both in shares ownership and transactions,” Krishna said on Wednesday as quoted by kontan.co.id.
He estimated that the JCI would close around 6,100 by the yearend.
Meanwhile, Krishna said, net sells by foreign investors had reached Rp 54. 91 trillion (US$3.59 billion) from January to Oct. 9, adding that capital outflows would continue to increase to late December.
Earlier, the International Monetary Fund (IMF) had estimated potential capital outflows of $100 billion from emerging economies. Khrisna estimated that $5 billion of this amount would come from Indonesia.
He said shares in the banks sector would remain attractive to the yearend due to a 12 percent growth of credit in three major banks, Bank Rakyat Indonesia (BRI), Bank Mandiri and Bank Central Asia (BCA).
He advised investors to focus on fundamentals, not market sentiment. (bbn)
