Performance Indonesia's Stock Market & Rupiah in 2016
When on Friday afternoon (30 December 2016) the Indonesia Stock Exchange (IDX) closed its doors it effectively brought the year 2016 to an end in terms of stock trading on the local bourse. On Friday Indonesia's benchmark Jakarta Composite Index fell 0.11 percent to 5,296.71 points after two days of impressive gains. However, when looking at full-year 2016 the Jakarta Composite Index climbed 15.32 percent, hence being the second-best performing (national) benchmark stock index (after Thailand) in the Southeast Asian region in 2016.
Key ingredients for the 15.32 percent growth of Indonesia's benchmark index in 2016 were the stable rupiah exchange rate, expectation of accelerating economic growth (after Indonesia experienced had been plagued by an economic slowdown in the years 2011-2015), gradually rising commodity prices, and the positive global response of global investors to Donald Trump's victory in the 2016 US presidential election. Meanwhile, the capital outflows from Indonesia that were brought on by monetary tightening in the USA near the year-end were somewhat offset by ongoing stimulus in the United Kingdom, European Union (EU), China and Japan.
Tito Sulistio, President Director of the Indonesia Stock Exchange, said he is happy with the performance of local stocks in 2016 and is hopeful that momentum will continue into the year 2017, supported by Indonesia's positive economic fundamentals (including accelerating economic growth, low inflation, a manageable current account deficit and stable rupiah rate).
After 2016 has come to an end in terms of stock trading in Indonesia, the benchmark index saw its market capitalization (the number of shares multiplied by share prices) grow by 18.2 percent to IDR 5,754 trillion (approx. USD $429 billion).
According to data from the IDX, the total amount of funds that were raised via the local bourse in 2016 reached a record of IDR 674.39 trillion worth of rupiah-denominated and USD $247.5 million US dollar-denominated earnings, stemming from initial public offerings (IDR 12.11 trillion), rights issuances (IDR 61.85 trillion), warrant sales (IDR 1.14 trillion), sales of conventional corporate bonds (IDR 113.29 trillion) and Islamic bonds/Sukuk (USD $47.5 million) as well as other market-related actions.
However, for a second year in a row, Indonesia missed its target in terms of initial public offerings (IPOs) on the Indonesia Stock Exchange (IDX). Only 16 companies were added to the local bourse this year, far below the target of 35 companies. Also in 2015, when the IDX initially targeted to see 35 IPOs (and later a downward revised target of 22 IPOs), targets were missed as only 13 companies were added to the IDX. This weak performance is attributed to the high degree of uncertainty about global economic conditions (China's economic slowdown, monetary policy of the USA and the 2016 US presidential election). Businessmen prefer to sell bonds or take up loans to finance business expansion, rather than conducting an IPO.
Meanwhile, Bank Indonesia's benchmark rupiah rate (Jakarta Interbank Spot Dollar Rate, abbreviated JISDOR) appreciated 0.27 percent at IDR 13,436 per US dollar on Friday (30/12). In full-year 2016 the currency of Indonesia appreciated 2.60 percent against the US dollar.
Indonesian Rupiah versus US Dollar (JISDOR):
| Source: Bank IndonesiaIndonesian markets are closed on Monday (02/01) for a small New Year celebration but reopen the following day.