Wind Optimism Blows from the Stock Exchange Floor

By : Arya Mandala And Aldo Bella Putra | Sunday, February 18 2018 - 23:00 IWST

Dirut BEI Tito Sulistio (Foto Dok Industry.co.id)
Dirut BEI Tito Sulistio (Foto Dok Industry.co.id)

INDUSTRY.co.id - Jakarta, Growth of composite share price index which almost reached 20% in the year 2017 become provision optimism of market players sailing in 2018. JCI is believed to still potentially strengthen to level 7,100.

Trading activity in Indonesian Capital Market closes with a victory party.

Because throughout 2017 and capital market performance reflected in the composite stock price index (CSPI) grow quite impressive.

At the opening of trading on January 3, 2017, JCI recorded perched at 5,275.97.

While at market closing December 29, 2017, JCI recorded at the level of 635.64.

In addition to re-scoring the highest JCI record throughout the Indonesian Capital Market journey, that figure also shows, throughout 2017 capital market, especially stock instruments capable of generating growth of 19.99%.

This is the fourth highest growth in the capital market in Asia Pacific.

The result was at least a provision of optimism in the market players to navigate the investment activity on the floor of the stock.

There is hope JCI can continue to rally to break the level of 7,100 in 2018 this year.

The key government should be able to maintain good economic governance, so that the target of economic growth of 5.4% is achieved.

The target is likely to be achieved if the government is able to keep inflation and interest rates at a low level, while increasing exports amid commodity price hikes.

So far Indonesia can manage its economy with prudent. So our economy will keep growing, "said Budi Hikmat Director Bahana Asset Management.

According to him, good economic governance will have an impact on the better perception of global investors and world rating agencies on investment risk in Indonesia.

We know that currently the three world rating agencies, Fitch Rating, Standard & Poors and Moody Credit Rating have embedded investment grade label for Indonesia.

There is a chance that Indonesia's rating will improve again in 2018. This is preceded by Fitch Rating which again ranks Indonesia's rating to BBB 'from the previous' BBB-' with outlook remains stable.

For Budi, the fact is a special value for the Indonesian Capital Market in the eyes of the world's financiers to choose Indonesian Capital Market as an investment target in the midst of global policy, especially the United States (US).

We know now the US plans to reform taxation by cutting the tax rate from 30% to 20%.

Besides, the Central Bank of Uncle Sam's Country will also raise the benchmark interest rate three times this year.

The policy has the potential to create reversal of funds from emerging markets to the US.

Budi is still questioning the investors' reversal action. Especially if the investment climate in Indonesia is still promising.

That money will be used to finance infrastructure in the US? It's still puzzling. What happens in the US is going to have a global impact, but that differentiates how investors will see each country have its own uniqueness and appeal," he added.

For that reason, Budi is optimistic that in 2018, Indonesia Capital Market will remain the target of world capital investment with the estimated growth of JCI to reach 15.3% by the end of 2018.

If the index numbers I think can reach the level of 7,100, he said.

Even so, the threat to the capital market is not just on a global scale, but also from within the country.

This is related to Indonesia's political climate in 2018 is believed to be getting hotter as the 2019 general election cycle approaches.

In addition, there will be 171 regional head elections simultaneously in 2018, including in areas that have been so engineered Indonesian economy such as West Java, East Java, Central Java, and Bali.

The investors will certainly calculate the potential investment risks to be faced in the 2018 political year.

Because of the political intrigue of the possibility of scattered feared impact on social stability and security and ultimately disturb the national economy.

Related to this, Vice President Jusuf Kalla (JK), inaugurating the Opening of Capital Market Trading 2018, at IDX Building, January 2, 2018 ensures, Political Year 2018 no riot.

According to him, it is only the perceptions and thoughts of the past.

"There is no evidence, for three times the political year there is a riot or collision, nothing at all, because the campaign is now different," he explained.

The vice president also said the risk associated with political momentum is minimal because if the campaign system had been conducted in the form of mass gathering, now the campaign is mostly done in the air or in the virtual world (medsos). So, no longer in the street.

He said, if the public good perception was developed, it will have an impact on the national economic growth.

"And that's all the effect to the economy, because the economy is also heavily influenced by factors beyond that," he concluded.

Even so JK still hope, so that investors are not affected on the issue of political year that has been dilencarkan through social media.

While requesting for capital market trading this year more developed again.

Similar views expressed President Director of BEI, Tito Sulistio. According to him, capital market participants have experienced the political year.

But none disturbs the performance of the capital market. Similarly later in 2018 and 2019.

Tito said that there are a lot of driving factors, why the capital market industry remains optimistic in the middle of noisy politics, one of which is the stability of domestic economic growth is quite good.

"The growth of our economic stability is very good, the government's experience in maintaining the economy is good, and the influence of the weakening Chinese economy can be passed well," he said.

In 2018, he said there were simultaneous elections, as well as political maneuvers ahead of 2019 presidential election (Pilpres).

But Tito convey optimistic that the political agenda will run conducive so that the national economic growth can grow according to the government target of about 5.4%.

Just look at the previous elections, or the 2004, 2009 and 2014 elections, the performance of IHSG remains positive.

"Historically, domestic political conditions have no impact on the stock market, but many say the political situation will be disturbing, but not for the capital market," he said.

Nevertheless, Tito said one that needs to be anticipated in the financial sector in the political year 2018, namely the potential withdrawal of funds from the financial sector, including capital markets.

Not only that the agenda of the Asian Games, IMF and World Bank performances in Bali, the World Cup in Russia.

"The agenda is adjacent to the payment of taxes, this should be anticipated, but if political sentiment, it will not influence," he said.

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