Several Sentiments Will Play The JCI Today

Illustration. (Photo: Doc. Antara)

JAKARTA - The movement of the Composite Stock Price Index (JCI) today, Friday, December 16, will be influenced by the Fed's decision to increase interest rates.

JCI moved in the range of 6,740 - 6,801 during yesterday's trading, Thursday 15 December. It was recorded that 215 stocks rose, 308 stocks weakened and 183 stocks moved in place. Market capitalization was monitored at the position of Rp9,280.36 trillion.

Financial Expert Ajaib Sekuritas Ratih Mustikoningsih explained that starting March 2022, the Fed routinely raises interest rates, until December 2022, the Fed interest rate rose 50 bps again to around 4.25-4.5 percent, as well as being the highest interest rate since 2007 during the subprime mortgage crisis.

In the equity market, foreign investors recorded a net sell of IDR 6.31 trillion weekly and in the past month recorded a net sell of IDR 11.13 trillion.

The increase in the Fed interest rate which triggered depreciation of the rupiah exchange rate also had an impact on imported inflation, so that issuers using imported raw materials would be depressed by the difference in exchange rate.

"Emitents that issue global bonds will also have forex loss that is getting bigger and will cause profitability to decrease," said Ratih in his research.

The Fed's decision to raise interest rates has made several central banks carry out the same policy, including Indonesia.

Bank Indonesia has followed the Fed's steps, as reflected in the fourth time it has participated in the BI Board of Governors' Meeting (RDG) in November the BI 7-Day Reverse Repo Rate (BI7DRR) was at the level of 5.25 percent, or an increase of 50 bps from the RDG last month. If calculated, the BI and the Fed interest rate spread is currently only 75 bps.

"Therefore, Bank Indonesia is predicted to continue to follow the steps of the Fed to raise interest rates next week in order to maintain the stability of the rupiah exchange rate and prevent capital outflows in financial markets such as stocks and bonds, amid the more attractive yields of US bonds," he explained. The Fed has the potential to continue rising interest rates until 2023 with a possible total increase of 75 bps in that period.

This is in line with the US annual inflation rate of 7.1 percent in November 2022, although it has fallen from the previous month which was recorded at 7.7 percent, but is still far above the Fed's target of 2 percent.

Therefore, He expects investors to be more careful in choosing stocks. Find good-fundamental stocks, have sustainable and defensive business prospects in the banking sector, metal mining and consumer goods.

"This is especially in the midst of the risk of economic weakening due to the hawkish policy," he concluded.