Jakarta, CNBC Indonesia – This week Dewi Fortuna is siding with the domestic stock exchange. Foreign investors who previously kept their distance have now ventured into and buy domestic equity assets.
Together with other Benua Kuning stock indexes, the Composite Stock Price Index (IHSG) managed to accelerate in the 2-6 November 2020 period. During that period, the JCI rose 4.31%. JCI was successfully closed at the level of 5,335.53.
Trade data noted that foreign net buying reached Rp 1.2 trillion in all markets in the past week.
The market welcomes Biden’s potential victory, especially for developing countries like Indonesia whose asset valuations are sensitive to the movement of the US dollar.
If by the end of the calculation, Biden is still ahead and becomes president, the US dollar will be even more depressed. One of the triggers for the depressed US dollar was fiscal policy which tended to be expansive, resulting in liquidity injections in the real economy.
The weakening of the US dollar will be accompanied by an outflow of capital from the US. The owners of capital will tend to take their money and invest it in the financial assets of developing countries.
The inflow of money from US investors to buy equity assets in the country has increased in price, as happened this week in the JCI.
Foreigners are recorded as buying up five shares of Indonesian companies with net buying actions of more than Rp 100 billion in a week. Two of the five stocks are shares from the banking sector, one miscellaneous industry sector, one mining sector and one consumer sector.
The shares bought the most by foreigners this week were shares of PT Bank Central Asia Tbk (BBCA). BBCA’s turnover value in a week reaches Rp. 3.6 trillion and foreigners buy up BBCA shares worth Rp. 1.2 trillion.
BBCA is an issuer with the largest market capitalization in Indonesia. The bank, whose majority shares are controlled by the Djarum Group, managed to book a profit of IDR 20.03 trillion or a decrease of 4% (yoy) in nine months this year.
Despite the decline, BBCA’s assets managed to penetrate IDR 1,000 trillion or grew double digits by 12.3% (yoy). On the other hand, BBCA is a bank that has very loose liquidity.
This liquidity is also supported by the large number of cheap funds (Current Account Saving Accounts / CASA) banks which reached 76% of total third party funds in September.
Then the second share that was also carried off by many foreigners was the shares of PT Bank Rakyat Indonesia Tbk (BBRI). This state-owned bank is one of the banks with the largest assets in Indonesia. This week, foreigners have bought up BBRI shares with a value of Rp 440.9 billion.
The national banking sector is indeed quite sexy. In addition to having better resilience in terms of capital and liquidity after the 1998 monetary crisis, the Indonesian banking sector is also known for its high returns and profitability to foreigners.
In addition, the role of banking in the national economy is central and there are still many unbanked Indonesia’s population is an opportunity that foreign investors are looking for.
Another share that was also bought up by foreigners was the shares of the national conglomerate company PT Astra International Tbk (ASII). The large number of subsidiaries, extensive industry diversification and ecosystem integration in each of the holding company’s supply chains make ASII an attractive stock and worthy of collection by foreigners.
In addition, ASII’s shares were still corrected by 15.88% year to date. Obviously, this is increasingly becoming an attraction for foreign investors to collect these blue chip stocks.
Foreign investors also do not want to be left behind in entering the gold mining sector in the country. The stock chosen by foreigners is PT Merdeka Copper Gold Tbk (MDKA).
Foreigners bought Rp 132.2 billion of MDKA shares, the majority of whose shares are controlled by the issuer Sandiaga Uno, namely PT Saratoga Investama Sedaya Tbk with an ownership of Rp 19.13%.
Investing in gold is indeed a trending thing when the US dollar is falling as it is today. Foreign investors do not want to miss the opportunity for further increases in gold prices because Biden’s chances of winning are big and the US dollar will further depreciate.
Foreign investors also enter the consumer sector through shares of PT Unilever Indonesia Tbk (UNVR). Indonesia is one of the fourth most populous countries in the world and its economy is supported by consumption.
Solid company performance, large market capitalization and enormous reach to the Indonesian consumer market are UNVR’s advantages which are probably the reasons for foreign investors to buy up these shares with a value of Rp. 117.2 billion.
CNBC INDONESIA RESEARCH TEAM
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