STOCK MARKET - JAKARTA. The Board of Governors' Meeting (RDG) of Bank Indonesia (BI) will overshadow the movement of the Jakarta Composite Index (JCI) next week. Market participants are waiting for BI policy certainty regarding the benchmark interest rate or BI 7-day reverse repo rate (7-DRR).
Analysts see a bad scenario if BI holds interest rates. "The JCI is likely to be corrected because market participants are worried about the rupiah exchange rate," said Hans Kwee, Director of Investa Saran Mandiri, last weekend (18/10).
Market participants believe that the Fed's benchmark interest rate will increase in December. Thus, market participants expect BI to anticipate this by raising the benchmark interest rate. But, if BI withholds interest rates, the market sees the depreciation of the rupiah will continue. This has the potential to weaken the stock index.
Season of financial statement release
In contrast, analysts at Artha Sekuritas Dennies Christoper saw BI not raising the benchmark interest rate. According to him, BI is too early to raise interest rates at this time. Assuming interest rates will not change, he estimates the JCI will move consolidated.
However, there is still potential for the stock market to be corrected because investors will secure portfolios ahead of the BI announcement. "The launch of financial performance is expected to sustain the JCI," Dennies added.
Analysts advise investors to set a strategy when dealing with BI's policy on interest rates. If BI interest rates increase, avoid banking and property shares. Instead, they can glance at infrastructure stocks and build state-owned companies that have good cash flow to the company towards the end of the year.
Hans recommended several stocks to be purchased, namely WIKA, WTON and JSMR with a target price of IDR 1,711, IDR 525, IDR 5,311.
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