Optimistic That The JCI Reaches 7,400 By The End Of The Year, Mandiri Sekuritas: The Fed's Monetary Tightening Policy Becomes A Challenge

Mandiri Sekuritas Head of Equity Research and Strategy Adrian Joezer. (Photo: Doc. Antara)

JAKARTA - Mandiri Sekuritas is optimistic that it has projected the Jakarta Composite Index (JCI) to reach the level of 7,400 by the end of 2022. One of the driving factors is the rising domestic consumption.

"Earning growth will grow by around 15 percent. About two-thirds will come from banking and much of it will be driven by domestic consumption," said Mandiri Sekuritas Head of Equity Research and Strategy Adrian Joezer, quoted by Antara, Wednesday, February 23.

According to Adrian, this year the domestic economy will recover after last year's export market was positive, as other countries recovered faster than Indonesia.

Adrian also assessed that the increase in the JCI was also supported by the increase in earnings and profit expectations of issuers which had appeared in the second half of 2021.

"If we look before August, the consensus of earning share is up and down and tends to be more flattening. But from August to December the trend continues to rise, so it reflects the optimism that is starting to build," said Adrian.

However, Adrian said that global risks have the potential to be a challenge for the JCI to reach the 7,400 level, one of which is the monetary tightening policy by the United States central bank, The Federal Reserve.

"We see not only how much the interest rate rises, but also the possibility of quantitative easing there. The Fed's view that this balancing reduction will be what the scheme will be and how fast is still a question mark, there is still a debate between the camps. shaken up there," said Adrian.

However, Adrian continued, on the other hand, the process of economic recovery itself is still considered very early. According to him, the policy of increasing interest rates by the Fed does not need to be fully followed by Bank Indonesia as the monetary authority in the country.

"The need to raise interest rates does not need to be 1:1 with what the Fed did. Inflationary pressure is there, but our recovery is still early. For example, the banking sector is still supportive so that this growth will improve compared to last year because liquidity is still very simple. , said Adrian.

He added that sources of volatility for the capital market will continue to exist, such as the Fed which may suddenly become more aggressive or global political risks will increase as is currently happening in Ukraine.

"However, as long as the decline in commodity prices is not sharp, can still be consistent, and the recovery from the domestic side of the economy is still very consistent during the transition period from the pandemic, these risks can still be maintained," said Adrian.