Jakarta Composite Index Up 0.59% on IMF's Economic Growth Upgrade
Although Indonesia's benchmark stock index (Jakarta Composite Index or IHSG) ended the first trading session down, it recovered in the second half of Wednesday's trading day (08/01). Investors were eager to buy stocks that have experienced a significant correction since May 2013. Moreover, as the Indonesia Stock Exchange reduced trading sizes to 100 shares per lot from 500 shares (to increase market liquidity and attract more retail investors), investors were able to benefit from these premium prices.
Some of these 'cheap' stocks that were hunted today included Astra Agro Lestari, Indo Tambangraya Megah, Matahari Department Store and Tambang Batubara Bukit Asam. Other factors that impacted positively on today's 0.59 percent rise to 4,200.59 points were rising Asian stock market and positive European openings. Lastly, market participants are optimistic that Indonesia's central bank will keep its benchmark interest rate (BI rate) at 7.50 percent at Thurday's (09/01) Board of Governor's meeting. Most analysts and investors see no reason for the bank to raise its interest rate again.
Although yesterday the Goldman Sachs Group Inc and JP Morgan Chase & Co advised investors to pull out from risky assets in emerging markets ahead of the Fed tapering, the International Monetary Fund (IMF) announced today that it will upgrade its outlook for global economic growth. This upgrade was well-received by market participants. Also the narrowing US trade deficit and weakening yen brought positive sentiments.
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