JAKARTA (Yosefardi) – Composite index of the Indonesia Stock Exchange opened higher 1.9% at 5315 this morning. Profit taking afternoon session on Friday last week (July 29) dragged down IDX by 1.57% to close at 5216. Investors (mainly local) sold off shares of consumer goods industry (-5.4%), manufacturing (-3.25%), and infrastructure (-1.27%). Foreign investors however booked net buy of Rp1.58 trillion, bringing year to date net buy to Rp24.87 trillion.
The laggard stocks Friday were HM Sampoerna (-9.7%), Unilever (-5.8%), Telkom (-2.5%), Indofood CBP (-2.8%), Matahari Department Store (-4.2%), and Charoen Pokhand (-3.8%). Telkom has gained 36.2% year to date, Unilever rose 21.8%, Indofood CBP hiked 27.6% and Charoen Pokphand lifted 44.2%.
Foreign investors’ appetite for Indonesian assets was growing amid slowing global economic growth. Falling oil prices – touching fresh three-month lows – caused more negative sentiments in global market. At domestic front the central bank of Indonesia (Bank Indonesia/BI) expects Indonesia’s inflation to reach slightly below 1% month-to-month (m/m) in July 2016. The Statistics Agency (BPS) will announce July’s inflation today. According to central bank surveys, Indonesia’s inflation accelerated in the first and second week of July by 1.18% (m/m) and 1.25% (m/m), respectively.
Juda Agung, Executive Director of BI’s Economic and Monetary Policy Department, said inflation tends to peak ahead of – and during – the Idul Fitri holiday (4-8 July) but is set to ease in the third and fourth week. High inflationary pressures in the first two weeks of July were caused by troubled distribution networks (due to the large flow of travelers during the Idul Fitri holiday) as well as rising air transport tariffs. Due to severe traffic congestion at key roads on Java the supply of certain commodities was disrupted, hence causing rising prices.
Meanwhile, the Indonesian government remains optimistic that the country’s economy will grow 5.3% (y/y) in the second half of 2016, primarily supported by rising government spending on infrastructure development. BI also expects the current account deficit to reach 2.1% of gross domestic product (GDP) in the second quarter of 2016, more-or-less the same as the 2.14% current account deficit in the first quarter of the year. Regarding Indonesia’s full-year 2016 current account deficit, BI has its target at 2.2% of GDP.