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Tough challenges remain after bank shares' rebound, say analysts
Analysts say bank shares are not out of the woods yet, and that the current political situation is contributing to uncertainty in the banking sector.
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Stock illustration of a bank (Shutterstock/Anton Violin)
Bank shares are still facing tough challenges after rebounding during Monday’s trading session from a significant drop.
Private lender PT Bank Central Asia's market capitalization declined 9.38 percent late last week to Rp 632 trillion (US$43.51 billion) from Rp 701 trillion in April, when it had a market cap weighting of 9.5 percent in the Jakarta Composite Index (JCI).
But on Monday, BCA shares increased 3.86 percent.
Meanwhile, the market cap of state-owned lender PT Bank Rakyat Indonesia (BRI) fell 16.27 percent from Rp 533 trillion to Rp 463 trillion for a market cap weighting of 7 percent.
The market cap of PT Bank Negara Indonesia (BNI) dropped 15.25 percent from Rp 177 trillion to Rp 150 trillion for a weighting of 2.3 percent. BNI shares increased 4.01 percent on Monday.
Samuel Sekuritas senior analyst Muhammad Alfatih said that bank shares increased on Monday because they had been corrected too deeply, kontan.co.id reported.
”The drop reached 10 percent and the investors started to buy the shares for medium- and long-term investment,” he added.
Oso Sekuritas analyst Sukarno Alatas viewed the rebound in bank shares as temporary, because the condition remained technically insecure. He believed that the banking sector would strengthen further if the JCI reached the level of 5,936.
Political conditions would also be a significant factor in the fate of the banking sector, said analyst Wijen Pontus of Royal Investium, adding that the uncertainty would likely continue until May 25 – the deadline for Prabowo Subianto-Sandiaga Uno to submit an election petition to the Constitutional Court. (bbn)
