As A Result Of The Demonstration, The JCI At The Beginning Of The Week Has The Potential To Weaken

Illustration. (Photo: Doc. Antara)

JAKARTA - The Composite Stock Price Index (JCI) is predicted to tend to weaken earlier this week, amid the rampant demonstrations that have occurred in the last few days.

Equity Analyst of PT Indo Premier Sekuritas (IPOT) David Kurniawan in his research said that market participants will focus on key sentiments, namely protests and market turmoil. Demonstrations of students and workers regarding the salaries of the DPR, education funds, and school food programs led to a decline in the JCI by more than 2 percent and a weakening of the Rupiah by almost 1 percent last week.

"The market will focus on the dynamics of demonstrations and statements of the authorities, including the steps taken by Bank Indonesia and the IDX or OJK, so as not to cause panic in the financial market," said David.

David predicts that the JCI will tend to weaken in this week. Traders and investors must also pay close attention to the important support level of the JCI this week of 7,700-7,800.

"Although last Friday, there was still a large flow of foreign funds entering the JCI, but it did not rule out their return to direction due to the effect of domestic political uncertainty," he said.

It is known, during the past week the JCI closed at the level of 7,830 or weakened by approximately 0.36 percent compared to the previous week. Foreign investors made purchases (inflows) reaching Rp1.3 trillion in the regular market.

However, David said globally there was a flow of global funds slowing down and investors turned out to be cautious about the independence of the Fed, after President Trump attempted to fire a Fed governor.

"As a result, the inflow into global equity funds has decreased," he explained.

In addition, continued David, the price of spot gold soared to around US$ 3,448.5 per troy ounce. Political uncertainty, such as Trump's efforts to replace the Fed Governor, prompts investors to seek protection through gold.

Responding to market dynamics that are currently very sensitive to demonstrations, David recommended that there be profit opportunities from four stocks, namely ANTM, HRTA, and SIDO.

Meanwhile, Indonesia's Senior Market Analyst Mirae Asset Sekuritas, M. Nafan Aji Gusta sees the opportunity to decline the JCI today as still open.

"Technically, the JCI has the potential to break down from the limit on the generation of broading wedge patterns, considering that Stochastics K_D and RSI have shown negative signals," he wrote in the research.

According to him, the market is still prudent regarding the recent demonstrations. If political and security conditions start to become conducive, then the potential for buy on dip will occur.