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Indonesian stocks surge on vaccine hopes
The Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX), gained 1.99 percent and closed Tuesday's session at 5,462.74
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ndonesian stocks soared on Tuesday to a level unseen since March as hope for a COVID-19 vaccine boosted investors’ appetite for risky assets.
The Jakarta Composite Index (JCI), the main gauge of the Indonesia Stock Exchange (IDX), gained 1.99 percent and closed Tuesday’s session at 5,462.74, a level last seen in early March when the impact of the coronavirus outbreak started battering the stock market. The rupiah appreciated 0.05 percent to 14,057 against the United States dollar.
Foreign investors bought Rp 2.25 trillion (US$158.76 million) worth of stocks more than they sold on the day, shedding some net sell recorded by them so far this year to Rp 44.09 trillion. Banking stocks moved the index, with state-owned Bank Rakyat Indonesia (BRI), privately owned Bank Central Asia (BCA) and state-owned Bank Mandiri becoming the top three movers on the day.
“The bullish market over the vaccine development will last by another one or two weeks and even longer should the FDA approve the vaccine to be widely distributed,” BNI Sekuritas research head Kim Kwie Sjamsudin told The Jakarta Post on Tuesday, referring to the United States Food and Drug Administration.
US pharmaceutical firm Pfizer Inc announced on Monday that its vaccine, developed with German partner BioNTech SE, had shown promising results.
“The first set of results from our phase three vaccine trial provides the initial evidence of our vaccine’s ability to prevent COVID-19,” Pfizer chairman and chief executive officer Albert Bourla said in a statement.
The trial result indicated that the vaccine was “90 percent effective” in preventing COVID-19 infection.
The company expected to seek emergency use authorization from the FDA soon after it received follow-up safety data on the side effects, which would be available in the third week of November.
The global and domestic stock markets have been heavily battered by pandemic fears as investors dump risky assets and turn their heads to safe haven ones, like gold and the US dollar. The negative sentiment has brought the JCI to its lowest level in more than five years at 3,937 in mid-March. The index has lost 13.36 percent of its value so far this year.
Regional indices, such as Tokyo’s Nikkei, Hong Kong’s Hang Seng and Singapore’s Straits Times, also increased on Tuesday following a bullish rally seen by the Dow Jones Industrial Average and S&P 500 indexes on Monday.
“We are hoping that the global economic recovery and [effective] vaccines will accelerate the economic rebound going forward,” Finance Minister Sri Mulyani Indrawati told a discussion on Tuesday, adding that 12 of 17 economic sectors ranging from construction to accommodation battered by the pandemic had started to recover in the third quarter.
Meanwhile, Financial Services Authority (OJK) chairman Wimboh Santoso expressed optimism that the country’s benchmark stock index would recover to 6,000 soon, driven by market sentiments on the vaccine discovery and US election.
Kim of BNI Sekuritas, however, doubted that the JCI would reach 6,000 so soon.
“Reaching 6,000 by the end of this year seems to be too aggressive,” Kim said. “Based on our projection, the JCI can reach 5,550 this year or maybe more considering the positive sentiments.”
He also warned investors to remain vigilant of any possible negative sentiments that could end the bullish market, such as a judicial review filed on the Job Creation Law. Should the Constitutional Court decided in favor of the plaintiffs, it could negatively impact the stock market.
Artha Sekuritas analyst Frederik Rasali also reminded investors to remain vigilant of the latest vaccine development.
“We still need further confirmation on the vaccine’s quality, production process and distribution,” he said.
The Pfizer vaccine might face hurdles in its distribution, especially to less affluent countries, as it must be shipped and stored at an extremely cold temperature, Reuters reported.
Frederik also said that should the global economy recover after the vaccine was developed and Joe Biden named US president, the JCI could reach the 6,000 level in 2021.
“The real sector still needs more time to actually prove that the economy has fully recovered, which will then help our stock market regain its strength and stability,” he said.
