Investors Turn Focus on Fundamental Economic Indicators
1 August 2014 13:54 WIB
TEMPO.CO, Jakarta - As the presidential election slowly began to lose momentum, market participants decided to return their focus on domestic economic fundamentals. Satrio Utomo, analyst from Universal Broker Indonesia, said that positive sentiments raised by KPU's vote recapitulation that declared Joko "Jokowi" Widodo and Jusuf "JK" Kalla as the new president and vice president-elect, respectively, have begin to fade. "[The] market's hope for the continuation of the Jokowi effect did not come true," he said.
According to Satrio, Jokowi-JK's victory on July 22 cannot be considered as exceptional because the pair's victory had already been anticipated by market participants, which caused buying action to peak just one day after the election on July 9. At that time, the Jakarta Composite Index (JCI) experienced more than two percent increase while foreign elements recorded a net purchase of Rp 4 trillion in one day.
In the future, market participants will be back to being realistic by referring to domestic economic fundamental data. They realize that economic growth will be difficult to reach the targeted six percent as the country's trade balance and current account are still experiencing deficit and BI interest rate continues to increase.
He added that the election of a new president would not give a signifcant impact because the inauguration will take place in the next two months, which is why the economic outlook of the country for the current fiscal year will still rely on policies and programs made by the previous government.
The rather unimproving economic condition has caused analysts to revise their year-end index prediction to a range of between 5,000 to 5,200 from the previous 5,500. However, with foreign elements continuous net buy following the election, the JCI may likely to reach a level of 5,200.
PDAT | M. AZHAR