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Outlook 2021: Vaccines, weakening US dollar to help JCI soar while risks remain
The Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX), had already increased 4.71 percent to 6,428.59 since the beginning of January.
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A woman walks past a large screen showing the trading numbers on the Indonesia Stock Exchange (IDX) in Jakarta on March 9, 2020. (AFP/Adek Berry)
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nalysts are optimistic about the recovery of the capital market this year after last year’s slump, thanks to the COVID-19 vaccination and weakening US dollar.
As of Wednesday, the Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX), had surged 4.71 percent to 6,428.59 since the beginning of January, and jumped 8 percent from Jan. 13 last year.
After a challenging and highly volatile 2020 due to the pandemic, Mirae Asset Sekuritas analyst Hariyanto Wijaya said on Dec. 12 that he expected the JCI to fare better this year on the back of earnings growth recovery and preference for emerging market equities asset classes, including stocks and bonds, amid the weakening United States dollar.
“The US dollar is likely to continue weakening in 2021 due to the US’ current account and fiscal deficits,” he wrote in a research note, adding that the low-interest rate trend should also put pressure on the currency.
As of Tuesday, the rupiah had strengthened 0.34 percent to Rp 14,082 against the greenback. It has also largely recovered from the peak point on March 3 last year at around Rp 16,500.
The stock market hit record lows last year, crashed to 3,937 in March, haunted by the impacts of the COVID-19 pandemic as investors dumped risky assets. The JCI gained a modest 1.7 percent in 2019 to close the year at 6,299 on the backdrop of sluggish economic growth.
A weakening dollar would create a positive impact for emerging markets, especially Indonesia as the IDX main gauge tends to book a positive performance during such conditions, he added.
