Indonesia Stock Index Avoids Correction Despite Tech Selloff
JCI reimbursed losses closer after hitting an earlier correction
Technical stocks are not affected by concerns over further US rate hikes
Outside the Indonesia Stock Exchange (IDX) in Jakarta.
Outside the Indonesia Stock Exchange (IDX) in Jakarta.Photographer: Dimas Ardian / Bloomberg
By Harry Suhartono and Fathiya Dahrul + Follow
May 13, 2022, 7:44 AM GMT + 5:30
Updated May 13, 2022, 2:08 PM GMT + 5:30
Indonesia's stock index avoided a correction after an intraday collapse of more than 10% from a high in April, pulled by technical stocks.
The Jakarta Composite Index of shares closed slightly changed on Friday, setting this week's loss of 8.7%. That is the worst week since March 2020, when the country closed its international borders to prevent the epidemic. The stock has dropped to 10.5% since April 21 before a recurrence.
Equities selloff sends Jakarta Composite Index to correction
Nosedive marks a reversal of what became Asia's most successful benchmark earlier this year, until a catchup game that followed a week-long market crash pushed the index to clear most of its 2022 profits. Indonesia's largest technology developer GoTo Gojek Tokopedia and digital lenders Bank Jago and Allo Bank Indonesia were among the worst performers this week as prospects for US rising standards faded.
"As the Indonesian stock market has a lot of stocks of technology and financial technology today, we are very much exposed to global volatility in the sector," said Jimmy Paul, Managing Director of PT Sucorinvest Asset Management. "It's hard to say how much evil is left."
Installation of MSCI
Several shares were acquired on Friday as they will be added to the MSCI Indexes, coal miners Adaro Minerals Indonesia increased by 2.6% and Bumi Resources Minerals increased by 12%, while Bank Bukopin increased by 4.6%.Signage atop the Indonesia Stock Exchange (IDX) in Jakarta, Indonesia, on Monday, April 11, 2022. Indonesia’s biggest tech company, surged on its first day of trading after raising $1.1 billion in one of the world’s largest initial public offerings this year. , Bloomberg
Indonesia is among the world’s best-performing emerging markets this year, as global stock investors pile into a market buoyed by commodity exports and a huge domestic consumer base.
The MSCI Indonesia Index has risen about 12% in dollar terms this year through Thursday, while the benchmark compiler’s broader emerging-markets gauge is down 14%, data from Refinitiv shows.
Meanwhile, flows from foreign institutional investors into equities in the Southeast Asian nation reached $5 billion in January through April, according to Goldman Sachs. That is nearly double 2021’s full-year total and contrasts with outflows across emerging Asia of $47.8 billion.
Indonesia is the world’s largest coal exporter and a producer of other key commodities such as oil, gas, nickel and palm oil. It has benefited from rising commodity prices, and investors have bid up stocks in mining and materials companies.
Shares in the coal miner PT Adaro Energy Tbk, for example, have risen nearly 50% this year. The company’s PT Adaro Minerals Indonesia Tbk subsidiary has surged since it went public in January, and its shares are now worth 27 times as much as their initial public offering price. Adaro Minerals mines and trades coking coal, which is used for making iron and steel. Indonesian markets will reopen Monday after being closed for holidays from April 29 onward.
Indonesia and other Southeast Asian markets such as Malaysia are benefiting from “a number of factors that include reopening-related optimism in the region as well as support from a deepening base of domestic investors in each country,” said Vijay Vaidyanathan, head of global capital markets for Southeast Asia at Morgan Stanley.
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