Stock Market in Indonesia likely to garner additional gains on the upcoming Monday

Monday Outlook for the Jakarta Composite Index: Cautious Optimism

The Jakarta Composite Index (JCI) is expected to open slightly lower or remain in a consolidation/sideways phase on Monday, following recent modest declines and mixed sector performance.

Last Friday, the JCI finished modestly higher, closing at 7,859 points, up by 0.12%. However, this gain was offset by losses from financial shares, cement stocks, and resource companies. For instance, Bank Danamon Indonesia, Bank Negara Indonesia, and Bank Rakyat Indonesia all saw declines, while United Tractors, Astra International, Energi Mega Persada, and Astra Agro Lestari experienced varying fortunes.

The global forecast for Asian markets is upbeat for Monday, with technology and financial shares expected to lead. However, Asian markets have been showing cautious sentiment recently, as U.S. and European markets have weakened. This cautiousness is expected to have spillover effects, potentially affecting the JCI.

Significant strength has emerged among banking, oil service, brokerage, and networking stocks in the U.S., with the Dow, NASDAQ, and S&P 500 all posting gains last week. The tech sector led Wall Street higher last week, with shares of Apple showing a substantial move upwards following the announcement of plans to spend about $600 billion in the U.S. over the next four years.

However, uncertainty prevails over the U.S.-Russia conflict over the war with Ukraine, combined with the threat of sanctions on Russian oil exports. This global geopolitical tension could potentially impact the Asian markets, including the JCI.

Longer-term projections by Trading Economics model point to a further slight decline toward 7,750 by the end of the quarter. A report from KIWOOM Research highlights the JCI is in a sideways consolidation around the psychological 8,000 level, with technical support around 7,785-7,800 points. Foreign investors recorded net buying, but the exchange rate USD/IDR saw slight upward pressure, reflecting external uncertainties tied to a strengthening dollar. Indonesia’s persistent current account deficit adds to cautious sentiment.

Valuation metrics and forecasts indicate a moderate expected return of about 9.5-9.6% annualized over the coming years, supported by economic growth and dividends but tempered by valuation mean reversion effects. This suggests no immediate sharp rally but steady underlying market potential.

In summary, the Jakarta Composite Index is likely to open modestly lower or remain in neutral/sideways trading on Monday, shaped by global market cautions, local economic indicators like the current account deficit, currency dynamics, and ongoing consolidation after recent gains. Investors are advised to closely monitor market developments and economic indicators to make informed decisions.

Stock Market in Indonesia likely to garner additional gains on the upcoming Monday