JAKARTA. The market capitalization value of Jakarta Composite Index (JCI) has dropped by Rp 277 trillion from Rp 5,756 trillion to Rp 5,479 trillion, Thursday (22/12).

Analyst at Binaartha Sekuritas Reza Priyambada said that the decrease in the capitalization value was driven by the decision of The Fed to increase the funds rate by 25 bps. “In addition, the domestic sentiment is also low,” Reza said.

Actually, there is no issue related to the domestic economic fundamentals. The decrease in the idx was caused more by the capital outflow, which was triggered by the portfolio rebouncing by the foreign investors, following the victory of Donald Trump in the US presidential election and the increase in The Fed’s funds rate.

Analyst at Erdhika Sekuritas Wilson Sofan added, the JCI has been weakening during the recent three years after hit the highest level. In average, the JCI has been declining by 3%-4% in that period. The index usually starts declining during September to Oktober. “But thsigis year index decreased significantly,” Wilson said.

Indonesia Stock Exchange (IDX) reached its market capitalization on 8 November 2016, with the value of Rp 5,918 trillion. In other words, the market capitalization has been cut by Rp 439 trillion or 7.42% as of Thursday (22/12). In this year, JCI reached the highest level of 5,472.32 on 4 October. The JCI has dropped by 7.85% from the highest level.

However, the idex does not necessarily continue to be bearish. According to Reza, the capital outflow has slowed down. The foreign investors have come back to stock market with a net buy of Rp 674.63 billion.

Meanwhile, the risk perception of foreigners on investment in Indonesia remains positive. The level of credit default swap (CDS) of Indonesia’s bonds with the tenor of 10 years also improved. After Trump was elected, CDS had once reached 272.55. On Wednesday (21/12), the CDS had dropped to 228.07.

The financial company IG Asia also favors Indonesia’s stock market for the next year. As quoted by Bloomberg, Market Strategist of IG Asia in Singapore, Jingyi Pan said Indonesia has the most promising fundamentals.

PT Indofood CBP Sukses (ICBP) experienced the most drastic decrease in capitalization value. Since the end of November, the capitalization of ICBP decreased by 9%. Reza said, the price to earning ratio (PER) of ICBP has exceeded the PER of the shares of other companies at the same sector.

(Muhammad Farid/Translator)

Editor: Rizki Caturini