Indonesian Investors Take Stock of Growth
In line with economic growth, shares of construction companies and some telecommunications firms have posted big share price increases so far this year, reflecting a better outlook for the development of the country’s infrastructure.
Shares of Wijaya Karya, a state-controlled construction company, have risen 66 percent so far this year. Lippo Cikarang, an industrial estate company, is up 105 percent as demand for industrial land has risen along with investments in manufacturing.
Telecommunications tower providers Tower Bersama Infrastructure and Sarana Menara Nusantara were also among the biggest gainers in Indonesia. The telecommunications sector rose 10 percent in the second quarter, based on data from the Central Statistics Agency (BPS).
Indonesia’s economy grew by 6.4 percent in the second quarter, driven by domestic consumption and strong investment, faster than its 6.3 percent first-quarter growth, according to the BPS.
The Jakarta Composite Index has gained 7.4 percent this year.
On Monday, the benchmark stock index rose 5.69 points, or 0.1 percent, to 4,105.50, extending the 0.2 percent gain made on Friday, as investors were cheered by better-than-expected domestic economic growth. Selling orders by some investors to realize the gains made during the previous trading days halted the rally. The JCI gained as much as 1.1 percent after the opening bell, but gradually declined.
About 3.02 billion shares worth Rp 3.55 trillion ($376 million), changed hands on the Indonesia Stock Exchange on Monday. Gainers outnumbered decliners 115 to 112. Foreign investors, who contributed 42 percent to the total trading value, sold Rp 81.7 billion in shares more than they bought.
“The strong gain in the first trading session was predictable and went along the sharp increase in the regional markets,” said Edwin Sebayang, head of research at MNC Securities in Jakarta.
On top of that, better-than-expected jobs data from the United States over the weekend coupled with higher-than-expected domestic economic growth has provided renewed momentum for the local market.
Edwin said economic growth for the remainder of the year had the potential to pick up pace, as governments usually do most of their spending during this period.
Stock traders said positive sentiment in the early trading day did not hold as investors cashed their gains ahead of a long holiday for Idul Fitri, which falls on Aug. 19.
“They take profit for the holiday and during a long holiday a lot of things can happen. That’s why they chose to pull back for now,” Edwin said.
The exchange starts its trading holiday on Aug. 17, for Independence Day, and it will last until Aug. 22 to mark Idul Fitri, the end of the Muslim fasting month.
On Monday, mining sector shares led gains, with the sector index up 1.7 percent. Adaro Energy, the second-largest coal miner, gained 4.6 percent to Rp 1,590.
XL Axiata, the third-largest cellular telecommunications operator, rose 2.3 percent to Rp 6,800 after the company announced it had secured a Rp 2.5 trillion loan from Bank Mandiri to pay off Rp 900 billion in maturing debt this quarter and to help finance capital expenditures.
Meanwhile, the miscellaneous sector, which covers the automotive sector among others, fell 0.4 percent on profit-taking after it accumulated 4.2 percent gain last week. The property sector, which is up 25 percent so far this year, lost 0.1 percent.