Indonesia Turns into Bullish Market as Quantitative Easing Continues
The Federal Reserve's decision not to change its quantitative easing program seems to have led to a bullish market in Asia. Indonesia's benchmark stock index (IHSG) rose 4.37 percent to 4,658.2 points after the first session on Thursday's trading day (19/09). All sectoral indices were up, with the property sector in leading position. Big cap stocks, in particular, performed well. Investors are relieved that the Fed did not alter its stimulus program. Thus, funds are expected to continue flowing to emerging markets, including Indonesia.
Although Indonesia still has to cope with a number of internal issues - such as the current account deficit, high inflation and a sharply depreciated rupiah - analysts believe that the IHSG can finish the year around the level of 5,000 points. On 20 May 2013, the index had reached its highest mark ever at 5,215. Thereafter, it quickly plunged due to a combination of the above mentioned internal issues and the Fed's intention to end its quantitative easing program.
The rupiah is also expected to stabilize now the Fed's bond-buying program continues at the same pace (USD $85 billion per month). On the Jakarta Interbank Spot Dollar Rate, the rupiah appreciated 1.7 percent to IDR 11.278 per US dollar this morning. The Thai baht and Malaysia's ringgit also rose sharply.
Selection of Big Cap Stocks after 1st Trading Session on 19/09
| Growth % |
Share Price | |
| Bank Mandiri |
7.51 |
9,300 |
| Bank Rakyat Indonesia | 7.09 | 8,350 |
| Telekomunikasi Indonesia |
5.62 | 2,350 |
| Astra International | 5.19 | 7,100 |
| Bank Central Asia | 4.95 | 10,600 |
Source: Bisnis Indonesia