Indonesia’s benchmark stock index (Jakarta Composite Index, or IHSG) grew 10.08 percent in full-year 2021, a good performance after a volatile and highly uncertain 2020 when the COVID-19 crisis emerged. At around 6,580 points on the first trading day of 2022, the index remains at near-record high territory (with the record being set recently, in mid-November 2021, at around 6,750 points).
Although there remain plenty of uncertainties as we entered 2022 (for example, will Indonesia indeed remain free from new COVID-19 infection waves this year?), we are optimistic that 2022 will become a good year for Indonesian stocks.
The prospect of Indonesia’s further accelerating economic growth (supported by a recovery in household consumption and private investment) brings a good business environment for listed companies in 2022, while the central bank (Bank Indonesia) signalled that it maintains an accommodative monetary policy well into 2022 (for now, it is expected monetary policy will only be tightened by Q3-2022). Therefore, Indonesia’s listed companies will still be able to enjoy cheap loans in case they want to invest in business expansion in 2022.
Stock market watcher Reza Priyambada expects to see a 12-15 percent increase in the IHSG in 2022, albeit he emphasized that it all depends on certain sentiments in the market. If these turn out to negative growth might fall below the range but if the sentiments are more positive than envisioned today, then Indonesian stocks could even rise beyond 15 percent. Regarding the market sentiments that are going to be felt in 2022, Priyambada states that these will especially depend on Federal Reserve tapering, COVID-19, macroeconomic data, and commodity prices.
Regarding sectors that look promising in case household consumption continues to improve, he mentions digital technology, banking, consumer goods, automotive, and property as quite prospective in 2022.
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