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Vaccine development to drive JCI’s Q4 performance: Analysts
Despite several tailwinds supporting the JCI’s outlook in the second half of the year, volatility will remain, at least until a vaccine has been approved, Bank Negara Indonesia (BNI) Sekuritas said.
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Employees pass a screen displaying stock movements at the Indonesia Stock Exchange building in Jakarta on March 11, 2020. (Antara/Galih Pradipta)
T
he performance of the Jakarta Composite Index (JCI), the main gauge of the local stock exchange, in the fourth quarter hinges on vaccine developments, analysts have said, as the progress of the COVID-19 pandemic remains an important driver of the index’ movement.
Despite several tailwinds supporting the JCI’s outlook in the second half of the year, volatility will remain, at least until a vaccine has been approved, Bank Negara Indonesia (BNI) Sekuritas said.
“All boils down to vaccine approval. We maintain our view that the approval for population use could be secured in the fourth quarter of this year or the first quarter of next year,” BNI Sekuritas research head Kim Kwie Sjamsudin told The Jakarta Post over a text message on Monday.
The firm expected the eventual approval would materially prop up the global market as the effective and safe vaccines would boost people’s confidence to resume normal activities and in turn jump-start the battered global economy, it wrote in a report on Aug. 7.
Kim said Monday his view remained “largely the same” as written in the report, which projected the JCI to close at 5,550.
Pandemic fear and uncertainty surrounding the outbreak’s economic uncertainty hit Indonesian stocks hard in March, pushing the index to crash to its lowest in more than five years at 3,937 as foreign investors dumped risky assets. The JCI has lost 20.64 percent of its value so far this year with foreign net sell recorded at Rp 43.88 trillion (US$2.97 billion) as of Tuesday.
“Without foreign capital, the lift would be difficult,” Bahana TCW head of macroeconomics and director for investment strategy Budi Hikmat said on Monday, referring to a difficult rally across all asset classes, including stocks.
