Stock Market Update Indonesia: Benchmark Index Near Record High
After three straight sessions of decline, Indonesian stocks are again rebounding toward record high territory. In the first trading session on Tuesday (31/10) the benchmark Jakarta Composite Index climbed 0.57 percent to 6,008.14 points, just short of the all-time record high of 6,025.43 points that was touched last week. The consumer goods index, particularly, is supporting the rise of the overall index.
Generally, Asian shares are showing a mixed performance on Tuesday (31/10). This performance is attributed to weak signals originating from US stocks overnight where the Dow Jones Industrial Average and the S&P 500 fell after the surfacing of a report stating that the House is considering to gradually lower the US corporate tax rate. This plan would leave the corporate tax rate at 20 percent by 2022.
Moreover, political uncertainty resurfaced in the USA after President Trump's former campaign manager, Paul Manafort, and his deputy, Rick Gates, were indicted on 12 charges of conspiracy against the US, conspiracy to launder money, failing to register as a foreign agent, making false statements and failure to report offshore bank accounts.
The news also affected the US dollar. Based on the Bloomberg Dollar Index the Indonesian rupiah had appreciated 0.18 percent against the US dollar by 11:40 am local Jakarta time on Tuesday (31/10).
Meanwhile, the latest economic data from China put additional pressure on Asian markets. The data indicated a bigger-than-expected slowdown in China's October factory growth. As a result investors' risk appetite declined.
Back to Indonesia; it is remarkable that the benchmark Jakarta Composite Index is in near-record high territory while there actually occurred capital outflow so far this year. Between 1 January and 24 October 2017, a total of IDR 17.1 trillion (approx. USD $1.27 billion) worth of foreign funds exited Southeast Asia's largest economy. Hence, the benchmark is currently being supported by domestic investors. According to data from the Indonesia Stock Exchange, 64,495 new local investors registered in Indonesia so far in 2017 (there are now 600,489 registered investors on the Indonesia Stock Exchange).
Strong appetite for Indonesian stocks from local investors is partly explained by the rise in number of initial public offerings (IPOs) in Indonesia. So far this year, 27 companies were added to the Indonesia Stock Exchange, up significantly from a modest 14 IPOs last year.