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Foreign investors remain upbeat
The Jakarta Composite Index (JCI) and rupiah started the week with a decline on Monday but foreign investors remain confident in the Indonesian economic outlook
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span>The Jakarta Composite Index (JCI) and rupiah started the week with a decline on Monday but foreign investors remain confident in the Indonesian economic outlook.
The index was down by 1.42 percent on Monday to 6,414.74, while the rupiah was also down by 0.24 percent to 14,078 per US dollar on the spot market.
Royal Investium Sekuritas analyst Janson Nasrial said the index’s decline was caused by domestic investors taking profits from last week’s gain as the JCI had been moving in an upward trend since before the election.
“Domestic investors sold off their shares to take profits after gaining enough returns from the past few days,” he said, adding that foreign investors were still buying Indonesian stocks, albeit in smaller volumes.
The JCI recorded a total of Rp 55.27 billion (US$3.93 million) in foreign net buys on Monday despite the index drop that day.
This, Janson said, was a sign that foreign investors were still optimistic about the JCI’s performance this year.
In the meantime, Panin Sekuritas analyst William Hartanto said the decline was caused by a slump in blue-chip stocks that had previously had a good run along with the JCI, which was up by 0.40 percent to 6,507.22 on Thursday.
Cigarette producer PT HM Sampoerna’s share price, for example, declined on Monday by 5.23 percent, while diversified conglomerate PT Astra International’s share price was also down by 4.14 percent. Declines in those stocks usually bring the JCI along with them as they have a large weight on the index.
The market decline in the week after the election, however, did not necessarily mean that the euphoria from the quick count result had subsided.
William said market players were still feeling the euphoria of the possibility of incumbent Joko “Jokowi” Widodo continuing his tenure as president for the next five years. However, such euphoria was only reflected in construction stock prices, not on the wider index.
The prices of state-owned construction companies such as PT Wijaya Karya, PT PP, PT Waskita Karya and PT Adhi Karya, had rallied on Thursday following the quick count results that revealed Jokowi and his running mate, Ma’ruf Amin, were leading the presidential race with a 54 to 55 percent of share of the vote.
Unfortunately, the rally only lasted until Monday morning as prices declined along with the index.
The quick count projections have been disputed by Jokowi’s opponent Prabowo Subianto, who claims he is the election winner, but this seemed to have little to no effect on the market, William said. “As long as there’s no chaos involved in the dispute, the JCI will still be okay,” he said.
Janson, meanwhile, said the index would probably increase by 2 to 3 percent in the month after the elections. He even predicted that the rebound could further increase by 4 to 6 percent in the next six months, as had been the case ever since Indonesia’s first direct elections in 2004.
As for the rupiah, Institute for Development of Economics and Finance (Indef) economist Bhima Yudhistira said the decline in the rupiah was largely influenced by the threat of increasing oil prices.
Reuters reports that the United States is expected to require buyers to stop importing oil from Iran soon to avoid sanctions. Such a move could potentially increase oil prices, which would affect Indonesia’s payments balance.
He predicted the rupiah would fluctuate within the range of 13,950 to 14,080 against the greenback on Tuesday, while he expected it to trade between 14,000 and 14,120 throughout the week.
