Policy Package Hype Keeps JCI Rally Going
Jakarta. Indonesia's main stock index jumped to its highest level in a month on the back of a stronger rupiah and high expectations about the government's much-anticipated third policy package, analysts said on Tuesday.
The benchmark Jakarta Composite Index (JCI) was up 2.35 percent to 4,445.781 in Tuesday's closing. The index started rallying on Monday, when it jumped 3.23 percent, on the back of strong 'net buy' moves by foreign investors.
About 6.60 billion shares worth Rp 7.36 trillion ($517.76 million) were traded on the Indonesia Stock Exchange (IDX).
Foreign investors, who made up 39 percent of the trading activity on Tuesday, booked a net buy of Rp 844.8 billion -- much higher than the net buy of Rp 335.3 billion on Monday.
"Market players, including foreign investors, are starting to sense positive news coming. They used this positive news [to make buying moves]," said Reza Priyambada, NH Korindo Securities' head of research.
Shares in the miscellaneous industry, which consists of automotive distributors and garment makers, led the hike at 8.9 percent, followed by shares in the finance sector with a 3.42 percent hike. On the other hand, shares in the agriculture sector fell 1.09 percent.
Meanwhile, Guntur Hariyanto, an analyst at credit rating agency Pemeringkat Efek Indonesia (Pefindo), said the hike was also caused by the sentiment from global fund managers, who according to him considered the shares valuation as having been too low.
Guntur also mentioned the rupiah's exchange rate against the greenback. The rupiah was up 1.81 percent and traded at 14,241 against the US dollar on Tuesday.
"Measures taken by the government and the central bank are appreciated by both global and local investors," he said. "Investors predict the government's third policy package will tackle more strategic issues ... On the other hand, Bank Indonesia has also intervened in the forward market and restricted purchases in the spot market, which helped the rupiah."
The rupiah has fallen around 16 percent so far this year, according to Bank Indonesia's Jakarta Interbank Spot Dollar Rate.
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