Local investors support stock market

JAKARTA. The capital outflows continue, as during the last one week the net sells of foreign investors reached Rp 3.1 trillion. However, the Jakarta Composite Index (JCI) remains solid. During the last week, JCI has increased by 2.4 to 5,245.96.

The analysts believe the stock index still has the potential to strengthen. Moreover, foreign investors did not drop all positions in the stock market. This reflects on the number of stock transactions that had driven the index last week. Foreign brokers were still active trading in the shares of the index movers.

For an example, PT Bank Rakyat Indonesia (BBRI) was the top of transaction mover on the last Friday. Morgan Stanley and Nomura recorded the highest net buys of BBRI shares that amounted to Rp 43.17 billion and Rp 13.60 billion, respectively.
Even so, the foreign brokers also sold their shares. The shares were then bought by the local investors.

Senior analyst at Bina Parama Artha Sekuritas Reza Priyambada said that to date the local investors adopt the strategy of foreign investors, who take advantage of market panic in order to get the stock at a low price. When the foreigners moved out, the local investors entered the market.

Director of Investa Saran Mandiri Hans Kwee said that the local investors would have been the sponsors of JCI until the end of the year. "The stock market can be stronger, as some local players have the potential of window dressing," Hans told KONTAN, Sunday (4/12). The window dressing of local investors may enhance the index’s position.

Hans said local investors are now more interested in collecting blue chip stocks. If domestic conditions remain stable, Hans predict JCI could be closed in the range of 5,350-5,400 at the end of this year.

Reza stated that the market participants do not have to worry about the the capital outflow from the stock market. In terms of the portfolio, foreign funds are still deposited in the Indonesian capital market. "As long as the economic condition stable, the issuer’s growth will be positive, and subsequently attract the investors,” Reza said. He predicted that the JCI will move at the range of 5,250-5,275.

Analysts said that several factors will affect to the JCI movement until the end of the year. First, domestic economic conditions. Market participants will monitor the data of the domestic economy and monetary policy of Indonesia. 

Second, The Federal Reserve's monetary policy. Market participants are fairly confident that the US central bank will raise the interest rates in this month. Third, the Donald Trump’s cabinet and its policy direction. Fourth, the results of referendum in Italy.

Fifth, the social and political conditions in the country ahead of the concurrent local elections. Hans said, the political tensions ahead of the gubernatorial election of Jakarta will lead to unease in investors, who participated in tax amnesty to repatriate their funds. (Muhammad Farid / Translator)