Alert, JCI may depreciate

JAKARTA. Global markets are overshadowed by the potential increases in The Fed’s funds rate, as well as the United States of America (the US) presidential election. Those two factors may also affect to Jakarta Composite Index (JCI).

The record of The Fed’s meeting indicated that The Fed tends to increase its rate in this year.

However, Head of Research Department at Daewoo Securities Indonesia Taye Shim estimated that domestic economy and the stock exchange will remain stable in responding to the two events. “Market has been aware of the potential increase in The Fed’s rate”, said Taye.

Taye added that market prefer to adopt wait and see stance towards the result of the US presidential election. According to Taye, in general market players prefer to Hillary Clinton, on the grounds that she has clearer point of views.

Head of Research Department at Universal Broker Indonesia Satrio Utomo is optimistic that the two sentiments will not have serious impact to JCI. He predicted that JCI will stand at the ranges of 5,200 to 5,300.

Satrio Utomo added that issuers performance will determine JCI movement. “Market is looking forward to having reports on issuers performance and the economic growth in the third quarter”, he mentioned. In this case, JCI will drop if the issuers show less satisfying performance. Under the worst scenario, Satrio predicted that JCI may have potentials to drop to around 5,100-5,200 in the fourth quarter.

Head of Research Department at Mandiri Sekuritas John Rachmat said that the US election and the issues related The Fed’s rate may lead to unease in market. Under this condition, John estimated that JCI may have potentials to drop to 5,150 in this month.

However, analysts are optimistic that this will only last in a short time. “We (analysts) believe that the risks will be under control. On the domestic side, we find positive sign from the recovery of public expenditure”, John said.

Therefore, John predicted that JCI will appreciate to 5,500 by the end of 2016, while Satrio has more optimistic projection that JCI will close at the ranges of 5,600-5,650. Meanwhile, Taye estimated that JCI will close at the level of 5,719.

John suggested investors to collect shares of issuers with solid fundamentals, such as BBCA, TLKM, MIKA, and PTBA. He also favors of issuers, which benefit from infrastructure programs and tax amnesty, such as WSKT, PWON, BSDE, CTRS, and DMAS.

(Muhammad Farid/Translator)