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JCI ends in red on last trading day
The local bourse has failed to conclude its last trading day of 2019 on a bullish note as it closed a year of unstable domestic political conditions and global economic uncertainty
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The local bourse has failed to conclude its last trading day of 2019 on a bullish note as it closed a year of unstable domestic political conditions and global economic uncertainty.
The Jakarta Composite Index (JCI), the Indonesia Stock Exchange’s (IDX) main gauge, closed Monday at 6,299.54 points, down 0.47 percent from Friday. Over the full year of 2019, the index gained a modest 1.7 percent, not nearly enough to make up for the 2.54 percent contraction recorded in 2018.
Still, Finance Minister Sri Mulyani Indrawati, who attended the closing ceremony on behalf of President Joko “Jokowi” Widodo, lauded the achievement.
“This year has not been so kind to us, so this achievement was achieved through extra effort from all stakeholders,” she said during the IDX closing ceremony in Jakarta.
The mediocre performance of the stock market index reflects a slight slowdown of the domestic economy. The country’s gross domestic product (GDP) grew by only 5.02 percent year-on-year (yoy) in the third quarter of 2019, the slowest pace in more than two years, as investment fell and household spending stagnated amid a cooling global economy due to trade frictions around the globe.
On the same day, Japan's stock market index, the Nikkei, finished its last trading day of the year down 0.76 percent. The index gained 18.2 percent in 2019 after dropping 12.8 percent last year, Reuters reported.
MSCI’s index of major Asian stock markets excluding Japan rose to its highest since June 19, 2018, on Monday, before trimming gains. It was last up 0.05 percent.
Sri Mulyani also lauded the IDX’s and the Financial Services Authority’s (OJK) efforts to “clean up” the bourse from unruly transactions and market players in an effort to maintain the capital market’s credibility.
This year, the IDX and the OJK imposed sanctions on several companies, such as national flag carrier Garuda Indonesia and property firm PT Hanson International, for issuing financial statements that were not in line with accounting standards. The OJK also fined Hanson International for an under-the-table deposit scheme that gathered a total of Rp 2.4 trillion (US$172.36 million) in public funds.
The local bourse recorded net foreign buys of Rp 44.63 trillion in 2019, thanks largely to Japanese financial giant Mitsubishi UFJ Financial Group’s (MUFG) massive tender offer early in the year. Foreign investors sold a total of Rp 23.39 trillion worth of Indonesian shares throughout the year.
Fifty-five companies listed their shares on the bourse through initial public offerings (IPOs) in the course of the year, fewer than the 57 recorded in 2018.
Most of the companies were seeking less than Rp 1 trillion in funds from their IPOs. Most funds were raised by feminine care and diaper producer Uni-Charm Indonesia, which generated Rp 1.25 trillion from its IPO in December.
As a result, the bourse only recorded a total of Rp 14.78 trillion in IPO fundraising, down from last year’s Rp 16 trillion.
IDX president director Inarno Djajadi, however, chose to see the glass half full.
“Thank God, we were able to record the highest number of [IPOs] this year [among] countries in the region,” he said.
IDX data show that, as of Friday, the Indonesian bourse topped the IPO list in Southeast Asia, followed by Thailand with 30 IPOs, Malaysia with 29 and Singapore with 11.
Even though it failed to surpass last year’s IPO number, the bourse was able to attract more Indonesian investors. The number of single investor identifications (SID) in the capital market jumped by 53.04 percent yoy to 2.48 million as of Friday, according to the Indonesian Central Securities Depository (KSEI).
KSEI president director Urip Budi Prasetyo said the investors were dominated by mutual fund investors, who accounted for 1.77 million SID, skyrocketing by 77.65 percent from the previous year.
“This shows that the self-regulatory organizations [SRO] approaches to beginner investors worked,” he said.
Binaartha Parama Sekuritas equity analyst M. Nafan Aji considers the high number of domestic investors a blessing for the JCI.
“If it weren’t for local investors, our index would have fallen much more this year, as foreign investors sold off their shares,” he said.
He was upbeat that the JCI would rise next year due to positive sentiment expected to improve the index’s performance.
“The stable economic growth of 5 percent, the proposed omnibus laws and a possible trade truce between the United States and China can be positive catalysts for the JCI in 2020,” he said, adding that he projected the index to touch the range of 7,015 to 7,265 points next year. (mfp)
