Finance Sector Should Watch for Hot Money: Analyst

TEMPO.CO, Jakarta - An economist from Samuel Sekuritas Indonesia Lana Soelistianingsih says the capital and money market need to be wary of movement of the Jakarta Composite Index (JCI). Last week, the index almost broke the 5,000-point mark.

"With the rapid surge, foreign investors will opt for profit and put pressure on the rupiah exchange rate," she said last week.

Lana said that as of March of this year, the inflow of foreign funds amounted to Rp19 trillion, surpassing last year's Rp15 trillion. She said that once foreign investors obtained their profit targets, they would immediately withdraw their funds from Indonesia, and "once out, foreign exchange will plummet and the value of the rupiah would be depressed," she said.

However, she said that the JCI's increase has also had a positive impact on the macro economy as it has pushed up stock prices thereby improving listed companies' performances. Lana said that sectors that will be affected by JCI's gain are domestic-based sectors such as construction, services, and banking.

Separately, director of asset management at Henan Putihrai, Sindhunata Felix, projected that the market liquidity will continue to rise, making investors more interested in the Indonesian capital market.

"Nevertheless we need to be aware and make sure that investors don't get too confident," he said.

RIRIN AGUSTIA