JCI Advances with Fuel Price Update

TEMPO.CO, Jakarta - Jakarta Composite Index (JCI) yesterday gained 19 points (0.4 percent) to close at 5,165 bps after the government announced there will be no price hikes on subsidized fuel. Analysts said market's optimism encouraged investors to buy.

Purwoko, chief researcher at Panin Sekuritas, said that investors were worried that a price hike will fuel inflation and trigger high interest rates. However, Coordinating Minister for the Economy Chairul Tandjung's announcement that prices will not be raised, put the market back on a bullish stance, with optimism that issuers' performance and the national economy will be as expected.

Purwoko said JCI's rate is also supported by global sentiments and the movements of regional bourses. The US demand for durable goods orders in August, which rose to 22.6 percent, built expectations that US economic recovery will go as planned. As a result, the market becomes certain that The Fed's accommodative monetary policy will last longer.

"Global investors responded positively over expectations of a low interest rates policy," he said.

Nevertheless, he suggested investors to selective buying since the stock price index is technically in an overbought phase. This period makes it hard for the index to remain in an uptrend.

Investors are also advised to focus on blue-chip stocks such as ASII, BBRI, and BBNI. Today, the JCI is likely to move between 5,140 and 5,182 bps with a tendency to strengthen, Purwoko projected.

PDAT | MEGEL JEKSON