Jokowi Sets Stock Market Target, but Some Analysts More Conservative
Jakarta. President Joko Widodo may have set a forecast on Indonesia’s stock market, but some analysts are more conservative in their targets for this year.
The president on Tuesday said that the benchmark stock measure, the Jakarta Composite Index, could reach record highs further, above 6,000 — a milestone that “would be great.”
“We have to be confident, must be optimistic that the economy will be better in the future,” Joko told reporters after meeting with Indonesia Stock Exchange president director Ito Warsito.
The JCI closed on Tuesday up 0.8 percent at an all-time high of 5,523.29, but ended Wednesday down 0.7 percent.
Andrew Argado, chief analyst at Recapital Securities, is pegging the JCI at hitting 5,850 by the end of the year.
Still, he said the president’s target is “possible,” adding that the economy could improve on the back of lower global crude oil prices, Indonesia’s improving trade balance and low inflation.
“I think it’s not nonsense. It might happen,” Andrew said.
“Investors will see this as a form of optimism. Jokowi is optimistic with his fiscal policy. I see the positive side that he wants to build optimism for local and foreign investors,” he said, referring to the president by his nickname.
Reza Priyambada, head of research at Woori Korindo Securities Indonesia, says the president’s forecast will not have much of an effect on investment strategy for investors, adding that Joko’s calculation was “unclear”.
“He already promised many positive things to market players. Could it be a reality? Will it be followed by an acceleration in investment and infrastructure? Market players are waiting for the realization of the president’s promises,” Reza said.
Woori has a moderate year-end target for the JCI — at 5,700 to 5,800.
Reza says, though, that it is possible for the JCI to reach 6,000 at the end of this year only if the government accelerates infrastructure development.
Indonesian stocks have gotten a boost in the past couple of months after the central bank, Bank Indonesia, cut its key interest rate — the BI policy rate — by a quarter of a percentage point to 7.50 percent, in a bid to boost economic growth. Indonesia’s economy has been flagged by a current account deficit and a weakening rupiah. One of the biggest hopes for the economy is fast-tracking projects for infrastructure, such as the construction of airports, seaports, highways and railroads.
Infrastructure-related stocks have been outperforming the benchmark. The index that tracks construction, property and real estate stocks has gained 13 percent since the start of the year, compared to the JCI’s 5 percent advance.
Indonesian Stock Analyst Association secretary-general Haryajid Ramelan said the president’s gesture for setting a target, even if there was no specific timeframe, was a “good thing to do to add more confidence for market players.”
“It will have a good outcome temporarily,” he said. “It’s very possible because some analysts, including myself, believe in Indonesia’s economic prospects, and that will bring the JCI to 6,000.”
Technical indicators suggest that the index will reach, or even exceed 6,000, Haryajid said. It would take the index to gain 9.4 percent from Wednesday’s close to reach 6,000.
Muhammad Alfatih, the head of research at Samuel Sekuritas, also gave his support for all-time highs.
“It’s only a matter of time,” he said. “From 2013, 2014 until now, we from Samuel Sekuritas saw the pattern and targeted the JCI to reach 6,000 or even 6,300.”
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Source: The Jakarta Globe