Independent Securities Projects There Will Be A Flow Of Foreign Funds Entering As Big As 10 Billion US Dollars By 2024

PT Mandiri Sekuritas projects that there will be a flow of foreign funds entering or capital inflow into the Indonesian market reaching 10 billion US dollars throughout 2024.

Chief Economist of Mandiri Sekuritas Rangga Cipta said that the entry of foreign funds occurred in the second quarter in connection with the signal of lowering the interest rate of the Central Bank of the United States (US), The Federal Reserve (the Fed).

"We see that there is a potential of around 10 US billion dollars this year if the Fed carries out a rate cut. We see that the market will move based on expectations, and usually before the actual cut of the Fed, there will be a signal of pruning that comes first," said Rangga at the 2024 Economic and Market Outlook at the Mandiri Tower, Jakarta, Monday, January 29.

In addition, Rangga projects that the Fed will cut the benchmark interest rate 3 to 4 times and start in May 2024. Overall, the Fed will lower interest rates by 125 basis points (bps) in 2024.

"The total cut in 2024 is 125 basis points, few expectations can be 50 basis points, 25 basis points," said Rangga.

Even so, Rangga admitted that he could not predict the exact time when the Fed would actually lower interest rates.

According to Rangga, the expectations of lowering the benchmark interest rate are in line with the decline in US inflation towards the Fed's target of 2 percent.

"This year, because inflation in the US has started to slope towards the Fed's target of 2 percent, it is possible that the Fed will cut its interest rates starting May 2023," he explained.

In addition, Mandiri Sekuritas projects inflation in 2024 to remain stable at around 3.2 percent and Bank Indonesia (BI) interest rates to fall by 75bp to 5.25 percent. Although there is still an effect of El Nino's rambutan which makes the main harvest late.

"We are afraid that in the first half there will be a shortage of food supply, so that food inflation will be accelerated. But in general inflation will be stable, such as the BI target of 1.5 percent-3.5 percent, so there are no risks like what happened in 2022," he said.

As for the Rupiah exchange rate, Rangga estimates that it will strengthen to the level of Rp. 14,900 on average, but still influenced by global economic volatility in the first quarter of 2024.

As for the stock market, Mandiri Sekuritas projects that the Composite Stock Price Index (JCI) will reach 7,640 in 2024.

Central banks in various countries have raised interest rates by 250 bps to 525 bps in the past 2 years which has led to a slowdown in global economic growth.

Rangga said that his party remains optimistic that Indonesia's national economic growth in the 2024 General Election (Pemilu) year will encourage growth in household consumption, although investment has the potential to slow down a little because it is waiting for the election results and future policy directions.

However, Rangga said there were several things, such as waiting for the election results from investors and global economic volatility to be watched out for.