JAKARTA. Trump’s inauguration speech did not clearly reflect the US’ future policy. According to some analysts, this will lead stock markets to consolidate.
Analyst at Binaartha Parama Sekuritas Reza Priyambada said, Trump has not specified his policies so that the markets will be skeptical. “Therefore the markets tend to be negative,” Reza added.
So far, Trump claims that the US will grow in all aspects, mainly economy. Market participants consider this statement as the potential of improvement in the US industry’s performance. In other words, the dividends payment will be higher.
However, foreign investors may potentially withdraw their funds from Indonesia. “If this happens, JCI (Jakarta Composite Index) will suffer net sell in three weeks period,” said Head of Research of MNC Securities Edwin Sebayang. In fact, the role of foreigners in domestic stock market remains significant.
Reza added, Trump’s promise to boost the US’ industry has trigger optimism. This will affect to the US stock market. In this case, the economic growth will be higher if the industry is growing.
However, Vice President for Research of Valbury Asia Securities Nico Omer said that the index of the US stock exchange has been high. Therefore, the index has a limited chance to increase during 2017. “As long as the US stock exchange is not corrected significantly, the JCI (Jakarta Stock Exchange) will continue moving sideways,” Nico said.
Market is now waiting for the US’ trade policy, mainly in terms of trade policy with China. Trump will restrict trade relations with China. Markets consider this as a negative sentiment and as the main cause of the capital outflow from Asia’s stock exchanges.
Reza predicts that the JCI will move at the ranges of 5,200-5,400 and 5,600-5,950 by the end of the year. “We have to monitor the effects of Trump’s policies, The Fed’s policy on interest rate, the economic recoveries of Europe and China, as well as the commodities’ prices movement,” Reza said.
In the domestic side, JCI would be affected with the realization of government’s policies, the implementation of infrastructure programs, government’s efforts on reducing deficit and debts, as well as the potentials for upgrading of debt rank.
Investors are also cautious of domestic security conditions. Political tensions grow ahead of concurrent local elections. JCI will move in negative zone if the situation becomes volatile.
Edwin estimates that JCI is potentially to move in positive zone to 5,945 by the end of year. This is an optimistic target. If the pressures continue, JCI will move to moderate target at 5,615. Edwin still favors mining sector, mainly coal, following the increase in commodities prices.
Edwin considers that the shares prices of coal mine issuers, such as BUMI, PTBA, ADRO, HRUM and other issuers are enjoying positive sentiments, thanks to the expectation of profits rise. (Muhammad Farid/Translator)
