TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Shares set to recover after free-fall last week
After losing more than 16 percent last week, prices of shares listed on the Indonesia Stock Exchange (IDX) are expected to recover slightly this week as analysts believe government efforts to stimulate economic activity will reduce the impact of the coronavirus outbreak
Change Size
A
fter losing more than 16 percent last week, prices of shares listed on the Indonesia Stock Exchange (IDX) are expected to recover slightly this week as analysts believe government efforts to stimulate economic activity will reduce the impact of the coronavirus outbreak.
BCA Sekuritas equity analyst Achmad Yaki said he believed the introduction of the stimulus measures would ease selling pressure, although the general mood among traders remained bearish.
“From Indonesia, we will have trade balance data on exports and imports on Monday and the result of the Bank Indonesia [BI] board of governors meeting next week,” he told The Jakarta Post via text message on Friday. He expressed hope that new data and the results of the central bank meeting would lend positive sentiment to the stock market.
Investment management firm Mandiri Manajemen Investasi president director Alvin Pattisahusiwa said he was quite sure BI would lower the benchmark interest rate by another 50 basis points (bps) in a bid to counter the impact of the coronavirus pandemic on the economy.
BI is widely expected to follow in the footsteps of the United States Federal Reserve, which brought down its key rate by 50 bps to a range between 1 and 1.25 percent on March 3 in an emergency cut to reduce the risks of the coronavirus on the national economy.
Achmad said investors would be watching the Fed’s Federal Open Market Committee meeting minutes to be released this week and looking out for United States data on retail sales, manufacturing activity and crude oil stocks.
He said he believes the new data, which is expected to show some improvement in the economy, will bring some positive market sentiment, which in turn will help push up the Jakarta Composite Index (JCI), the main price benchmark on the IDX, after losing more than 16 percent last week.
Share prices plunged across the board last week following the World Health Organization’s announcement declaring the coronavirus outbreak a pandemic. That announcement, on top of the sharp drop in global crude oil prices, heightened tensions among global market players and triggered a market “circuit breaker” by temporarily halting all transactions in stock exchanges around the world, including Indonesia, where trading was halted twice last week as the index dropped past the limit.
The IDX has reduced its limit down price twice as the free-fall in share prices continued. On Monday, the exchange cut the limit down price or the daily limit on share price losses to 10 percent from between 20 and 35 percent depending on price ranges to prevent share prices from further falling. As the plunge continued, the IDX further cut the maximum allowed drop to 7 percent on Thursday evening.
The exchange also issued a new trading suspension regulation that stipulates that the IDX will halt stock trading for 30 minutes if the JCI falls by more than 5 percent.
If the index keeps falling for more than 10 percent after the first suspension is lifted, the bourse will halt trading for another 30 minutes. Trading will halt for the whole session if the JCI continues to plunge deeper than 15 percent.
The Financial Services Authority also rolled out a new policy on Monday last week by allowing listed companies to buy back their shares without having to go through a general shareholders meeting. Deputy commissioner for capital market supervision Fakhri Hilmi said on Thursday that the move could help alleviate the pressure on the JCI.
The State Palace announced on Saturday that Transportation Minister Budi Karya Sumadi tested positive for the coronavirus and the number of confirmed cases exceeded 100 on Sunday.
Anugerah Mega Investama director Hans Kwee said on Saturday that he believed the JCI would move in the green early this week. “Uptrends in the US and European market, combined with local stimulus from the government, could make the index move into positive territory in the early days of [the] week,” he said.
The government announced Friday that it was allocating Rp 120 trillion (US$8.38 billion) from the state budget to stimulate the economy through tax incentives and subsidies for workers, businesses and families affected by the COVID-19 pandemic. It also launched a second stimulus package worth Rp 22.9 trillion consisting of individual and corporate tax breaks, as well as a relaxation of loan disbursement and restructuring requirements. (ydp)
