Foreign investors’ funds are still expected to enter the stock and bond markets in Indonesia. Indonesia’s good economic fundamentals attract foreign investors. In addition,village Melayu bombing that occurred on Wednesday, May 24, 2017 also not too affect the stock market. The sentiment is judged only short term.
The flow of funds of foreign investors out of the stock market on several days is still considered reasonable. Foreign investors realized their gains after the Composite Stock Price Index was high.
Foreign investors posted a Rp 466 billion sale in three days on the stock market. However, foreign investors’ funds flow to the stock market reached Rp 22.16 trillion during 2017.
PT. Asjaya Indosurya Securities analyst William Suryawijaya said that the incident of village Melayu bomb did not influence the stock market. This is shown from the flow of funds of foreign investors out of the stock market only slightly on Friday, May 26, 2017.
Wlliam said that foreign investors are still interested in investment portfolio in Indonesia. This is because Indonesia’s economic fundamentals are quite good. Moreover, Indonesia’s debt rating has also been recognized globally with international rating agency Standard and Poor’s upgraded Indonesia’s government debt to be worthy of investment or at BBB- level.
“Indonesia’s economic fundamentals are quite strong, which proves that S & P is upgrading with a stable outlook,” said William.
In addition, Indonesia has a strong foreign exchange reserve and the movement of the rupiah against the US dollar is stable to attract investors. Indonesia’s foreign exchange reserves amounted to US $ 123.2 billion at the end of April.
William added that improved commodity prices will also have a positive impact on the company’s performance. It is expected that the performance of listed companies in the capital market or issuers will also be positive in 2017, will add Indonesia more attractive to foreign investors.
The same thing is said by capital market observer Beben Feri Wibowo. The incident of Kampung Melayu bombing last week was only a temporary sentiment. Foreign investors’ funds are still expected to enter Indonesia.
He said, if there is potential foreign funds out of funds, it is more driven by global sentiment such as the policy of the central bank of the United States (US) or the Federal Reserve. Then, the policy of US president Donald Trump is sometimes not accepted by market participants.
“Global sentiment is still there a condition of how the exchange rate of rupiah against the US dollar,” he said.
Beben rate, if the Indonesian government is able to control the rupiah to be stable then there is no reason foreign investors out of Indonesia. Unless foreign investors are realizing a temporary gain with the opportunity to re-enter stocks and bonds that are already in a neutral and oversold condition.
Beben said, Indonesia’s economic fundamentals become an attraction for foreign investors. This is seen from the economic growth of 5 percent, inflation in the range of 4 percent with a plus of minus one percent, and a decent investment rating for Indonesian government debt by S & P.
PT NH Korindo Securities analyst Bima Setiaji expects investors to realize profits after speculation of S & P’s upgrades since March. In addition, the JCI valuation according to Bima is already overstated or an increase in net profit estimate by the end of the year. “PE IHSG at the beginning of the year about 15.8 times,” said Bima.
Bima rate, foreign investors’ funds out of the stock market is still reasonable. He said the investment grade rating for Indonesian government securities by S & P is still a medium to long term sentiment.
Negative sentiment that will confront the rate of JCI, according to Bima, is inflation. It is predicted that inflation may be high considering Ramadan, as well as Ramadan inflation.
“The high inflation rate in May will be a problem for Bank Indonesia because there is an estimated increase in federal rate from the US central bank or the Federal Reserve,” he said.
For the stock sector, Bima estimates, the construction stock sector is still very attractive until the end of the year. This is because of the low valuation and potential net profit growth in the next two years as the value of new contracts.
As is known, the rate of JCI rose 7.49 percent year to date to the level of 5,693 in stock trading Tuesday, May 30, 2017. Of the 10 stock sectors, basic and chemical industry shares posted the highest growth throughout 2017. Recorded growth in the industrial stock sector Base and chemistry of 13.88 percent.
Followed by the financial stock sector climbed 13.19 percent and the infrastructure, utilities and transportation sectors climbed 7.35 percent.