Indonesian stocks rallied more than 10 percent on Thursday following gains in the US market, but analysts warn it may be temporary since COVID-19 risks remain on the radar.
The Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX), concluded its trading at 4,338.90 on Thursday, recording a 10.19 percent gain compared to Tuesday. The jump was also the highest increase the index had recorded in the past month, instantly reversing this week’s decline on Monday and Tuesday. The stock exchange was closed Wednesday for Nyepi (Hindu Day of Silence).
As many as 300 stocks closed in the green on the day, led by state-owned lender PT Bank Rakyat Indonesia, which recorded a 20.49 percent gain. Diversified petrochemicals giant PT Barito Pacific's share price was also up 19.52 percent, followed by consumer goods giant PT Unilever Indonesia, which recorded a 19.38 percent increase. As many as 129 stocks declined.
Investors and traders were very active in the market on Thursday as the IDX recorded a total transaction value of Rp 12.75 trillion (US$786.31 million) on Thursday, which is double the average transaction value.
Foreign investors recorded a Rp 662.26 billion net buy during the day, most of which was spent on private lender PT Bank Central Asia and state-owned lenders PT Bank Mandiri and BRI.
Koneksi Kapital analyst Alfred Nainggolan told The Jakarta Post that investors were accumulating on buying stocks on the day as the market was closed the day before.
“Today’s rally was a delayed response to the United States’ sentiment that caused the Wall Street and other major global indices to rally,” he said.
On Wednesday, the US Senate unanimously backed a $2 trillion bill aimed at helping unemployed workers and industries hurt by the COVID-19 pandemic, as well as providing billions of dollars to buy urgently needed medical equipment, Reuters reported.
The sentiment caused the Dow Jones index and S&P 500 to rally for two days in a row on Thursday’s closing, while Asian markets in Tokyo, Hong Kong, Shanghai and Singapore recorded an increase on Wednesday.
It also explained why the JCI was the only one moving in the green on Thursday, against other Asian indices that all closed in the red. Japan’s Nikkei, for example, recorded a 4.51 percent decline, while Hong Kong’s Hang Seng, China’s Shanghai Composite Index and Singapore’s Straits Times Index were down less than 1 percent.
Despite the soaring JCI, Alfred warned investors not to rush to buy more stocks for the time being.
“The main problem of the COVID-19 pandemic is not yet resolved. There is still a high chance of further corrections in the future,” he said.
Jasa Utama Capital analyst Chris Apriliony said the JCI would slow down its pace on Friday with a slight decline, fluctuating between 4,250 and 4,450.