Investors still bullish about stocks, expect gain in Q4
Ika Krismantari , The Jakarta Post , Jakarta | Fri, 10/16/2009 11:23 AM | Business
As confidence in the economy continues to rise, investors in Indonesia remain bullish about the stock market — already one of the world’s best performing bourses — and still expect sharp gains ahead, says a survey.
The stock market’s main index has risen by more than 70 percent so far this year, making it the best performing bourse in Asia.
The index stands a good chance of rising even further as global financial services giant ING stated on Thursday that investor confidence in Indonesia’s economy was slightly up in the third quarter from a quarter earlier.
The survey showed that 93 percent of the surveyed investors were taking a wait-and-see approach to re-evaluate their investment portfolio after Susilo Bambang Yudhoyono’s victory in the presidential election in July, although 36 percent of them planning to make investment decisions only after the new ministerial appointments.
Investment in stocks however are likely to stay strong as the survey found that investors remained bullish about the equity and property markets, with the majority of them believing the two segments would expand by 7.5 percent and 6.9 percent respectively in the fourth quarter, from the previous quarter.
That expectation of further gains in the stock market index is likely to drive more people to adopt a more “aggressive” stance in the fourth quarter. In the third quarter, the proportion of investors deploying an aggressive strategy reached 30 percent, compared to 14 percent posted in the second quarter.
“The shift towards a more aggressive approach indicates investors are considering making an early play in the expectation of sharp market gains ahead,” stated the survey.
The Indonesia Stock Exchange (IDX) index climbed 0.15 percent on Thursday to close at 2,515.38.
Meanwhile, the survey found that investor confidence in the overall economy, on a year-on-year basis, grew more robust in the third quarter than in the same period a year earlier, ING head of research and chief economist Tim Condon said over the phone from Singapore.
“Foreigners are more optimistic about Indonesia as we can see from the foreign inflows,” he said.
He pointed out that foreign capital inflows to Indonesia had reached up to US$600 million in the third quarter of 2009, or double the figure from a year earlier.
Condon also warned investors about a possible inflation threat at the end of 2009 and beginning
“We see a short-term inflation issue, as the boom-bust-boom in commodity prices in the last 18 months works its way through the customers’ price index,” Condon said.