JCI Is Believed To Reach 7,500 By The End Of 2022

Illustration. (Photo: Doc. Antara)

JAKARTA - Despite the turmoil in macroeconomic conditions, Samuel Sekuritas assesses that the Indonesian stock market remains prospective and the Jakarta Composite Index (JCI) will be in the positive zone this year.

Samuel Sekuritas analyst Prasetya Gunadi said that Indonesia's macroeconomic outlook is currently becoming more challenging due to a number of global and domestic factors. Domestically, Indonesia is facing the negative impact of the increase in fuel prices announced in early September, as well as the effects ahead of the upcoming election year.

Seeing this, Samuel Sekuritas has lowered its forecast for Indonesia's gross domestic product (GDP) growth to 4.7 percent in 2022 from 4.8 percent previously and to 4 percent in 2023 from 4.7 percent previously. Samuel Sekuritas also raised its inflation forecast to 6 percent in 2022 from the previous 5 percent and 4.5 percent in 2023 from the previous 4.4 percent.

"However, considering Indonesia's current macroeconomic situation which is better than many other countries, which can be seen from the current account surplus and the inflation rate which is still quite under control, we believe that Indonesia will not experience a 'hard landing'," Prasetya wrote in his research, quoted on Friday. October 7th.

When compared to other indices in Asia, the Jakarta Composite Index (JCI) is the index that produces the largest return since the beginning of the year. This is supported by the high interest of foreign and retail investors.

Even though foreign investors sold fairly large blue chip stocks in June-July 2022 due to global macroeconomic uncertainty, foreign investor inflows continued to strengthen in the following months, as well as boosting the net buy figure to IDR 69.5 trillion from the beginning of the year to mid-September. 2022.

The average daily trading value has also started to recover in August, growing 20 percent on a monthly basis to IDR 12.3 trillion, after declining 18 percent and 27 percent on a monthly basis in June and July.

Prasetya sees the potential for a number of challenges for the market next year, including foreign capital outflows due to the Fed's policy, tightening monetary policy due to rising inflation, and political risks. However, Indonesia's current strong economic position is expected to prevent excessive market declines.

"In addition, the decline in the Indonesian market occurred before the announcement of the Fed's interest rates, and the JCI is currently trading at a fairly attractive valuation (forward P/E 14.1, below the 5-year average and below -1.5 SD)," he explained. .

Samuel Sekuritas projects that JCI returns will grow by 25.8 percent in 2022 and 10.6 percent in 2023. The fundamental scenario index targets for 2022 and 2023 are 7,500 and 8,300, respectively, with a P/E of 14.0x (below -1.5 SD ).