JAKARTA. The Jakarta Composite Index (JCI) in a short time period will be affected by the United States of America or the US’ market policies. The market is waiting for the results of Federal Open Market Committee (FOMC) meeting, which will be held at the early of February 2017.
At the beginning of this week, the market has started being alert of responding Trump’s aggressive policies, including the ban for citizens of seven countries, which are predominant muslims, to enter the US.
On the last trading day of January 2017, the JCI corrected by 0.16%, while foreign investors recorded a net sell of Rp 405.8 billion. However, on year to date basis, the JCI only corrected by 0.05%.
Director of Investa Saran Mandiri Hans Kwee said, the markets previously were optimistic that Trump’s policies will be business friendly. However, the extreme rules of banning the visit of citizens from seven countries have led to anxiety in the markets.
Therefore, investors should review the direction of Trump’s policies in a long term period. Previously, Trump had decided the US to quit from Trans Pacific Partnership (TPP).
On the other hand, the US’ monetary policy is predicted to remain unchanged after the first FOMC meeting in this year. The Fed is predicted to have not raised the interest rate in this quarter. According to Hans, The Fed is likely to raise the interest rate in the middle of the year.
Therefore, market will tend to adopt wait and see stance in a short term period. The foreign capitals outflow during the recent two days reflected the market’s concern over the global influence.
However, while the indexes of other countries’ stock markets dropped drastically, the JCI tended to be stronger and only slightly corrected, thanks to solid domestic economy and controlled inflation, Hans said.
Head of Research at Yuanta Securities Kim Kwie Sjamsudin mentioned, the market will tend to be flat during January-February. “There has been no catalyst that brings significant impact to the market. Therefore, many investors still adopt wait and see stance,” Kim said.
He estimates that the effect of Trump’s policies to the local stock market will be only temporarily. Conversely, the domestic sentiments, mainly domestic politics, contribute the most to the uncertainties in the local market. “Aside of Indonesia’s political factor, the investors also monitor the realization of tax amnesty policy,” Kim added.
Kim estimates that in a short term the market’s trading range will not be much different with the current level. The JCI is predicted to move positively during the second quarter of this year, mainly after issuing the issuers’ financial reports.
According to Hans, the JCI’s consolidation will open chances to accumulate buy. He predicts that the JCI will move with the support of 5,267 and the resistance of 5,331 in a short term.
The JCI will remain volatile amid the volatile global markets. In this case, the corrected market will be an opportunity to accumulate buy. Market participants can do trading sell of the market is much stronger.
Amid the volatile market, the shares of Bakrie Group’s issuers, such as BUMI, ENRG, BRMS and ELTY will be attractive. This condition brings opportunities for the investors to buy those types of shares.
Hans also recommends the blue chips shares of construction and banking sectors such as PTPP, BBNI, BBRI and BBCA. Meanwhile, Kim favors blue chips shares of TLKM, UNVR and ASII.
(Muhammad Farid/Translator)
