Capital Inflow Reaches Rp32tn

TEMPO.CO, Jakarta - Indonesia Stock Exchange president director Ito Warsito said the increasing growth of capital inflow from year to year should encourage people to be optimistic about the Indonesian capital market. Year-to-date, the amount of capital inflow into the domestic market has reached Rp32 trillion.

"It is not just because of the general elections, but also because the economy is growing," Ito said yesterday. In terms of economic growth, Ito said that Indonesia is to be one of the best among the G-20, losing only from China.

The Indonesian stock market is still attractive because domestic issuers' profit growth exceeds other regional markets such as Thailand, Tokyo, Shanghai, and Malaysia. Because of this, he believes Indonesia will remain as an option for global investors' investment destination.

"I believe [the stock price index] will continue to rise until the end of the year despite its daily ups and downs," he said.

The negative global sentiment stemming from The Federal Reserve's tapering off program did not prompt investors to exit the Indonesian capital market. "No global investors will ignore Indonesia because our economic growth is quite well and Indonesian issuers have a higher return on equity (ROE)," he said.

Farial Anwar, analyst from Currency Management, estimated that capital inflow in the long term can lead to the strengthening of the rupiah. The rupiah appreciation will also be supported by the improving economic fundamentals that will attract more global investors to the financial market.

"Yields given in Indonesia is also relatively high compared with other emerging markets," he said.

Farial predicted the rupiah to gain further ahead of the presidential election. The combined forces of a positive domestic sentiments and a market that has adapted to The Fed's QE3 cutback will boost Indonesia's stock and money markets to become more robust.

TRI ARTINING PUTRI | MEGEL JEKSON