Indonesia’s Composite Stock Price Index: A Forecast of Strength and Growth

Indonesia’s Composite Stock Price Index: A Forecast of Strength and Growth

An Upward Trend for the IHSG

Indonesia’s Composite Stock Price Index (IHSG) is expected to display an upward trend in the coming week, with projections estimating the index movement to fall within the range of 6,970 and 7,040. This optimism is largely influenced by a series of positive sentiments both domestically and globally.

Maximilianus Nico Demus, Associate Director of Research and Investment at Pilarmas Investindo Sekuritas, has noted several key factors that could potentially contribute to the strengthening of the IHSG. These include positive sentiment from the United States’ Q2 2023 GDP, potential decreases in European inflation data, improvements in China’s economy, and a forecasted decrease in unemployment rates in Japan.

Domestic Sentiments and Their Impact on IHSG

The IHSG’s potential strengthening is also supported by internal factors within Indonesia, including political developments concerning presidential and vice-presidential maneuvers. Additionally, the launch of the carbon exchange, scheduled for Tuesday, September 26, is expected to act as a positive catalyst. Companies that sell carbon credits, contribute to carbon emission absorption, or have business segments in new renewable energy will find this particularly beneficial.

Some of these companies include PT Barito Pacific Tbk, PT Pertamina Geothermal Energy Tbk, PT Kencana Energi Lestari Tbk, and PT Arkora Hydro Tbk. Other domestic factors expected to influence the IHSG include the release of data on the amount of money in circulation and the development of credit disbursement for the period of August 2023.

Global Sentiments and Their Potential Influence

Global sentiments also play a significant role in the trajectory of the IHSG. The final economic growth of the US for Q2 2023, the release of consumer indexes such as personal expenditure for August 2023, and the Michigan Consumer Sentiment Index for September 2023 are all expected to reflect positively on the IHSG. These indexes reflect consumer expectations of the US economic condition.

Despite high interest rates, the US economic condition is expected to remain resilient, potentially positively influencing the IHSG. With all these factors at play, the IHSG is expected to strengthen within the range of 7,000 to 7,040.

Understanding the Indonesia Stock Exchange (IDX)

The Indonesia Stock Exchange (IDX) manages securities transactions in Indonesia. Its primary objective is to provide an infrastructure that enables orderly, fair, and efficient trading of securities. The IDX has seen significant growth, with a record number of investors in 2021 and 713 company listings as of 2020.

The IDX was created from the merger of the Jakarta Stock Exchange (JSX) and the Surabaya Stock Exchange (SSX). Initially established in 1912 for the interest of the Dutch East India Company, the IDX has undergone several periods of inactivity and activity throughout its history. In May 2018, the exchange updated its trading system and created a new data center, solidifying its position as a credible and globally recognized stock exchange.

Emerging Markets and Their Risks

Emerging markets like Indonesia, however, come with their own set of risks for investors. They generally do not have the level of market efficiency and strict standards in accounting and securities regulation found in advanced economies like the United States, Europe, and Japan. Despite these challenges, emerging markets do typically have a physical financial infrastructure, including banks, a stock exchange, and a unified currency.

Final Word

In conclusion, the IHSG’s projected strengthening is backed by positive sentiments domestically and globally, from political maneuvers to economic indicators. Despite the inherent risks in emerging markets, Indonesia’s stock market offers promising prospects for investors, supported by its robust financial infrastructure and increasing investor participation.