RI stock index hits fresh three-year high
RI stock index hits fresh three-year high
Dadan Wijaksana, The Jakarta Post, Jakarta
The Jakarta Composite Index surged on Thursday to its highest
level in more than three years as foreign funds continued flowing
into the bourse.
Led by continued heavy buying of blue chips shares, the index
closed at 575.19 points, around 3 percent higher than the
previous day's closing.
The index also recorded a multi-month high of Rp 1.5 trillion
(US$176.78 million) in daily trading value, which dealers
attributed the surge in foreign fund inflows.
"Just like on Wednesday, heavy buying by foreigners of blue
chips shares was the reason for this," a dealer with a local bank
said, adding that JP Morgan Securities and ING Securities were
among the busiest traders of the day.
The hectic buying started on Wednesday, when trading value
jumped to Rp 1.3 trillion from its normal daily range of Rp 300
to Rp 400 billion.
This means that in the past two days alone, the index has
risen by around 7 percent, and since the start of the year by 30
percent.
The dealer said that the capital inflows had to be seen in the
light of the country's macroeconomic performance, notably the
declining trend in Bank Indonesia's benchmark one-month SBI
interest rate.
"The stable macroeconomic picture has helped boost foreign
investors' confidence in Indonesia's economy," he said, adding
that the falling SBI interest rate had made the stock market more
attractive for portfolio investment, especially for those seeking
quicker and higher returns.
The central bank slashed its rate to an historic low of 8.83
percent this week, down from 8.91 percent the previous week, on
the back of continued easing in inflation. Many have predicted
inflation will be only between 5 percent and 6 percent by the end
of the year.
The relatively calm political and economic situation following
the recent bombing at a Jakarta hotel had also supported foreign
investor confidence, he added.
Meanwhile, thanks to the capital inflows, the rupiah remained
stable despite dollar demand from importers, which had put the
local unit under pressure over the past few days.
The dollar closed on Thursday at Rp 8,480, unchanged from its
close the day earlier.
Dollar demand from importers pushed the rupiah down to 8,495
per dollar at midday, but the flow of funds into the stock market
helped the local currency regain ground.
Analysts have said that the planned Rp 5 trillion bond issue
next week would likely keep the capital inflows going, ensuring
an even brighter outlook for the rupiah.