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Indonesian markets to benefit from Biden win: Analysts
Foreign investors appear to be returning to the country’s equities.
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A security officer stands near an equities display at the Indonesia Stock Exchange (IDX) building in Jakarta on April 3. (Antara/Aprillio Akbar )
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merging markets will benefit from United States President-elect Joe Biden’s administration, analysts have said, while noting that his expected approach, including efforts to cushion the economic impact of the pandemic, will bring major foreign capital inflows to Indonesian equities and currency.
BNI Sekuritas head of equity research Kim Kwie Sjamsudin said Biden’s globalist approach would reinvigorate global trade, which would, in turn, boost Indonesia as a major commodity exporter.
“If commodity prices rebound, I expect the Jakarta Composite Index [JCI] and the rupiah to perform well,” Kim told The Jakarta Post on Monday.
In a report published on the same day, Kim said that in addition to the positive sentiment on global trade, the Biden administration would lead to a “structural positive shift in emerging markets”, as fiscal stimulus and infrastructure spending under Biden was expected to be larger than such that under Trump.
Such an approach could weaken the dollar and make emerging markets more attractive for investors.
“We expect foreign investors, who have been heavily trimming their exposure over the past three years, to resume their inflows on a combination of waning risk aversion and potential outperformance of Indonesian equity and currency,” Kim wrote in the report.
Joe Biden, the 46th president-elect of the United States, has run on advancing multilateral trade, contrary to Trump, who has approached global trade with an “America first” philosophy.
