JCI surges 7.5% driven by state-owned buyback plan and BI-Rate hike
The Jakarta Composite Index (IHSG) on the Indonesia Stock Exchange (BEI) closed sharply higher on Tuesday afternoon, driven by a planned buyback programme for large-cap state-owned enterprise (SOE) shares and a hike in Bank Indonesia’s benchmark interest rate.
The IHSG closed up 404.51 points, or 7.57%, at 5,746.65. Meanwhile, the LQ45 index of 45 leading stocks rose 42.24 points, or 8.01%, to 569.32.
Research Analyst at Infovesta Kapital Advisori, Arjun Ajnawi, stated that the main sentiment was the discussion and plan to buy back big-cap shares such as members of Himbara (the Association of State-Owned Banks).
During a press conference on Tuesday morning, there were discussions between the House of Representatives (DPR RI), Danantara Indonesia, Himbara, BPJS Ketenagakerjaan, and state-owned insurance firms regarding the planned buyback programme for Himbara bank shares. “The DPR meeting with the Ministry of SOEs, Danantara, and Himbara involved coordinating to maintain the stability of these shares amidst pressure and turmoil from both global and domestic sentiment,” Arjun said.
Later, during the second trading session, Bank Indonesia announced a 25 bps increase in the BI-Rate to 5.50%, in an effort to strengthen rupiah exchange rate stability. The move is seen as reaffirming a policy priority shift back towards strengthening the exchange rate and anchoring inflation, while also increasing the attractiveness of portfolio fund flows into Indonesia.
Furthermore, the index rise was supported by commodity sector stocks, as the government confirmed there would be no gross split mechanism in the export scheme. Market concerns that exporters would be required to surrender part of their export proceeds to state intermediaries began to ease, reducing the risk of disruption to exporters’ cash flow.
On the other hand, Arjun cautioned that the IHSG’s significant strengthening in today’s trading would likely lead to potential profit-taking by market participants, particularly for trading tomorrow. “Because today’s rally is quite strong, there is potential for profit-taking,” Arjun noted.
The IHSG opened higher and remained in positive territory until the close of the first trading session, and stayed in the green throughout the second session until the close.
Based on the IDX-IC Sectoral Indices, all eleven sectors strengthened, led by the raw materials sector which rose 9.71%, followed by the energy and industrial sectors which rose 9.04% and 8.24% respectively.
Shares that recorded the largest gains included BABY, AHAP, CTTH, MHKI, and PSKT. Meanwhile, shares that experienced the largest declines were GMTD, GRIA, CTBN, DPUM, and MPMX.
Trading frequency was recorded at 2,714,279 transactions, with 45.06 billion shares traded, valued at Rp27.93 trillion. A total of 678 shares advanced, 89 declined, and 48 were unchanged.
Asian regional stock markets this afternoon included the Nikkei Index strengthening by 1.92% to 65,251.00, the Shanghai Index strengthening by 1.28% to 4,010.03, the Hang Seng Index weakening by 0.37% to 24,565.90, and the Straits Times Index strengthening by 1.20% to 5,023.67.