JAKARTA. Jakarta Composite Index (JCI) records the best performance among stock markets in Asia. On year to date basis, JCI recorded a 18.22% growth, surpassing Thailand index that grew by 14.71%. During the same period, Shanghai and Nikkei even recorded negative performance.

Head of Research Department at Koneksi Kapital Alfred Nainggolan said that the domestic fundamentals have contributed to a stronger JCI along this year. To date, the total net buy of foreign investors has amounted to IDR32.76 trillion. “The macroeconomic growth is still on the track, and I am optimistic that the macro economy will grow by 5% at the end of this year”, said Alfred on Tuesday (18/10).

Alfred added that Indonesia Stock Exchange (IDX) benefits from the stable rupiah exchange rate and political condition. These have led foreign investors to be confident to invest in Indonesia’s stock market.

It is predicted that two sentiments will overshadow the stock market by the end of this year. First, the tax amnesty revenues. Second, an expectation of international rating agency Standard & Poor’s (S&P) to raise Indonesia’s ranking. Alfred estimated that JCI may hit 5,600 by the end of 2016 if those two factors meet market’s expectations.

Analyst at Recapital Securities Liga Maradona predicted that JCI may grow at minimum 10% by the end of this year compared to the same period in 2015. Liga estimated that JCI may record a 20% increase if S&P increases Indonesia’s ranking.

He is optimistic that Indonesia has large opportunities to obtain the level of investment grade, on the grounds that some government programs have been realized. Liga added that the new ranking will drive hedge fund to flow to the market.

Furthermore, investors also wait for the allocations of repatriated funds of tax amnesty program to real sector and stock market. Liga predicted that JCI may be affected by two external factors, namely the plan for increasing The Fed’s funds rate and the US presidential election. According to Liga, JCI has potential to rise if the increase in The Fed’s rate meets the market expectation.

According to Alfred, a stable rupiah exchange rate will drive foreign capital inflows. Furthermore, the JCI movement will also be affected by the improvement in the commodities prices during the second semester of 2016.

One of the prospective sectors is mining. Aside of mining, consumer and construction sectors may have potentials to grow.

Alfred favors ADRO, PTBA, INDF, AISA, WSKT, and PTPP shares. He is optimistic that those issuers may book a 10%-12% net profit in this year.

Meanwhile, Liga recommends investors to collect the stocks of banking sector, such as BBNI, BBRI, BMRI, and BBCA, He also favors the shares of issuers from infrastructure, construction, and consumer sectors, such as ADHI, WIKA, PTPP, WTON, WSBP, UNVR, HSMP, ICBP, and MYOR.

(Muhammad Farid/Translator)

Editor: Barratut Taqiyyah Rafie