Jakarta, CNBC Indonesia – The Composite Stock Price Index (JCI) continues to climb to its highest level of 6,700, although it is still hovering at 6,600.
The benchmark index for Indonesian capital market players on the Indonesia Stock Exchange (IDX) closed minus 0.35% at 6,632 on Thursday (21/10/2021). In the last month, the JCI has lost 9% and since the beginning of the year it has increased by 11%.
In trading this Friday (22/10), the JCI was at the level of 6,636, or up 0.04% with a transaction value of IDR 8 trillion at the beginning of session I.
Michele Gabriela, Head of Research at PT Sucor Asset Management, said that the increase in the JCI was actually triggered by the lower levels of Community Activity Restrictions (PPKM) in various regions, sparking optimism over economic recovery during the pandemic.
The decline in cases of Covid-19 infection along with the increase in the number of vaccination programs which reached 50% was also another reason for the increase in the JCI.
The fairly high increase in the JCI also led to a decline in blue chip stocks or leading stocks, resulting in lower prices (undervalued). Cheap here in terms of valuation compared to its fair price which can be calculated with a number of financial ratios, including price to earnings ratio (PER) and price to book value (PBV).
PER is calculated by comparing the company’s condition with the price per share while PBV compares the company’s value in the market compared to the book.
“We see that many blue chips are already quite cheap compared to some stocks that have rallied at the beginning of the year, this is because the JCI rose quite high,” said Michele in the CNBC Indonesia Investment program, Thursday (21/10/2021).
Furthermore, Michele said that when viewed fundamentally, blue chip stocks at current prices are still relatively cheap.
“If you look at it in the long term, the upside potential is still there,” he said. “Short term correction will still be seen. Yes, we are still optimistic that stocks will still rally.”
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