In line with the general trend in Southeast Asia, Indonesian stocks traded mostly higher on the last trading day of the week. Despite not-so-good H1-2015 corporate earnings reports from the larger listed Indonesian companies, the benchmark Jakarta Composite Index was up 1.33 percent to 4,775.10 points in the first trading session on Friday (31/07). According to market watchers, Indonesia’s index is experiencing a technical rebound after falling earlier this week. However, the index is still on track to post its second straight monthly decline.
Weak corporate earnings in the first half of 2015 were posted by several key companies, such as Astra International, the country’s largest diversified conglomerate (and often referred to as the barometer of the Indonesian economy). Its net income fell 18 percent (y/y). Unilever Indonesia, another giant in terms of market capitalization on the Indonesia Stock Exchange, saw net income rise by a mere 2.9 percent in H1-2015.
Meanwhile, listed Indonesian banks, which in recent years had become used to post double-digit growth figures, now saw single-digit growth or a decline in growth. For example, Bank Mandiri, the country’s largest financial institution by assets, saw net income rise by 3.3 percent only in the first half of 2015. Net profit of Bank Negara Indonesia (BNI), the country’s fourth-largest bank in terms of assets, fell 50.8 percent. Bank Central Asia (BCA), Indonesia’s second-largest bank by assets, experienced single digit net income growth of 8.8 percent.
Weak earnings of Sampoerna Agro (palm oil) and Tambang Batubara Bukit Asam (coal mining) show that we should not expect too much from the commodities sector. Net profit of Sampoerna Agro fell 46.9 percent, while net profit of Tambang Batubara Bukit Asam fell 31.2 percent in the first six months of 2015 (from the same period last year).
Meanwhile, Wall Street ended flat on Thursday (30/07) and therefore provided no ammunition for Indonesia’s benchmark stock index to rise as sharply as it did in the first trading session. However, the gain is expected to be temporary as investors are there is no strong enough indication that corporate earnings will improve in the next couple quarters without enhanced government spending, particularly infrastructure spending.
The Indonesian rupiah depreciated 0.20 percent to IDR 13,485 per US dollar according to the Bloomberg Dollar Index by 13:20 am local Jakarta time. Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) depreciated 0.10 percent to IDR 13,481 per US dollar on Friday (31/07).