JAKARTA. Most of the shares of the big caps issuers have contributed to the decline of Jakarta Composite Index (JCI). During November 2016, the laggard stocks have slumped by 300.44 points.

The shares of PT Telekomunikasi Indonesia Tbk (TLKM), PT Unilever Indonesia Tbk (UNVR), and PT Bank Rakyat Indonesia Tbk (BBRI) have reduced the JCI by 36.4 points, 30.2 points, and 28.8 points, respectively.

Along November 2016, the JCI has been declining by 5.4% to the level of 5,122.10. Analyst at Yuanta Securities Parningotan Julio said that the foreigners controlled the shares. Whereas, since 9 November, the foreign investors continued to book a worth of Rp 8.67 trillion net sell.

During this month, some negative sentiments, both domestic and external, have affected the JCI. The internal negative sentiment derived from the religious defamation, which expanded to political issue and triggered the demonstrations. The external sentiment derived from the Trump’s effect and the potential of the increase in The Fed’s interest rate.

All of the sentiments have led to capital outflows. As information, as of the third week of November, the total net sell of the foreigners amounted to Rp 9.6 trillion. This has jumped four times compared with the net sell in October that amounted to Rp 2.28 trillion.

On the other sides, the fundamentals of the issuers with the big caps were affected by the negative sentiments of the weakening rupiah. “The issuers, which have burdens and debts in the form of the US dollar will be pressured by the sentiments,” the Head of Research at Bahana Securities Harry Su in his research on the last 12 November.

In terms of consumer sector, Harry estimated that when the rupiah depreciated by 1% against the US dollar, the net profit of the consumer issuers may dropped by 2.6%. For examples, PT Indofood Sukses Makmur Tbk (INDF) and PT Indofood CBP Sukses Makmur Tbk (ICBP). Harry estimated that the net profit of each issuer has dropped by 3.9% and 2.9%, respectively, when rupiah depreciated by 1% against the US dollar.

The negative sentiment has decreased the prices of the big caps’ shares. However, it does not necessarily mean that the shares’ prices became lower than the other issuers’. For an example, despite the P/E of UNVR has decreased by 9.6% in this month, it is still higher than the P/Es of the similar issuers.

Therefore, Julio suggested investors to adopt wait and see stance to buy the shares of the big caps issuers. The right time to buy the shares is still unpredictable.

However, usually the market will be more conducive in December, thanks to the window dressing. Julio suggested investors to wait until the net sell trend subsides before entering to the market. “It is impossible that the foreigners will be completely moving out from Indonesia’s market,” Julio said.

(Muhammad Farid/ Translator)

Editor: Barratut Taqiyyah Rafie