JAKARTA. Jakarta Composite Index (JCI) has secured an 18% of growth along this year. The achievement related to the improvement of global oil prices. The decreases in the US oil reserves and the expectation for improvement on oil demand during winter may increase the oil prices by this year.

According to Bloomberg, Jakarta Mining Index only comprised 4.4% of the total leverage of JCI along this year. However, the ratio has increased from 2.9% in 2015.

When the prices of oil and other commodities were hiking in 2010, mining index contributed to 16.29% of the total of JCI’s leverage. This year, the increase in global oil prices has signed improvement in global economy. This has subsequently brought positive sentiments to stock market.

Recently, oil price stands at the level of US$51.85 per barrel. Director of Investa Saran Mandiri Hans Kwee said that the oil price tends to be more stable by the end of this year so that commodities’ issuers are predicted to secure better performance in the second semester of 2016.

The increase in oil price has contribution to the increases in the prices of other national commodities, such as coal and nickel. At Indonesia Stock Exchange (IDX), Coal issuers have higher leverage compared to other issuers at the sectors of oil and gas.

A coal issuer, the price of PT Adaro Energy or ADRO’s shares has increased by 191% along this year. Furthermore, ADRO’s shares, which have IDR48 trillion of capitalization value, have contributed 29.5 points to an 816.24 points of the increase in JCI.

Hans estimated that the oil prices rise is an external factor, which becomes the indicator of global economic recovery.

The OPEC’s plan to reduce production and the decline in the US’ oil reserves are projected to strengthen the oil price. Furthermore, China’s stable inflation rate and economic growth have also contributed to oil price rise.

However, the increase in oil price may rise the US’ inflation rate, which may drive the increase in The Fed’s rate. Hans expected that The Fed’s rate may increase by 25bps. “But this has been predicted by market”, he said.

According to Hans, to date the price earning ratio (PER) of JCI is quite expensive. Hence, JCI is expected to record limited increase despite a number of positive sentiment may still affect to JCI’s movements. He expect that JCI will be closed at around the level of 5,600 by the end of 2016.

Analyst at Asjaya Indosurya Securities William Surya Wijaya expected that the oil price will have moderate increase, on the grounds that the excessive increase will affect to issuers at the segments of consumer and transportation. “The excessive increase will enlarge the distribution costs of issuers at consumer and transportation segments,” he said.

William added that the JCI rise along this year is caused more by the improvement in economic fundamentals condition. He estimated JCI will stand at the level of 5.524 by the end of 2016.

(Muhammad Farid/Translator)

Editor: Barratut Taqiyyah Rafie