JAKARTA (TheInsiderStories) - President Joko Widodo has expressed his optimism that the Jakarta Composite Index (JCI) could grow faster in the second half of 2015 after slowing down in the first semester driven by positive sentiment on Indonesia economy. In April, Joko Widodo expects that the JCI to reach 6,000 by the end of the year.
He says the government will work hard to improve the economy and push the government’s spending to give positive sentiment to the market. The JCI strengthened 0.73 percent to 4,769.91 at Tuesday’s opening.
“Economic improvement will create a positive perception on the capital market. That perception will spur optimism and move the market. It will also affect the local currency, even though pressures from the global economy are still there,” Widodo told reporters at the Capital Market 38th anniversary in Jakarta.
He admitted that only a small amount of the State Budget was realized in the first half but he promised the government and State Own Enterprises (SOEs) will boost spending in the second half to boost the economic growth.
Indonesia’s economy grew at its slowest pace since 2009 during the first half of the year at an annualized rate of 4.67 percent, prompting the government to revise its full-year growth target to between 5.0 and 5.2 percent, from the 5.7 percent projected in the 2015 State Budget.
In the first half of the year, the government spent just 40 percent of the Rp 290.3 trillion allocated for infrastructure development for the full year.
Indonesia Financial Services Agency (FSA) and Indonesia Stock Exchange (IDX) recorded for the period of January 2 to August 7, JCI dropped by 9.01 percent from 5,244.77 to 4,770.30 due to global economy turbulence.
Executive head of FSA Nurhaida told reporters on Monday, that the development of global economic crisis such as Greece, China plus some of domestic factors have triggered investors to re-balance their investment portfolios in the emerging markets including Indonesia. Such investors move has put pressure on the capital market condition.
Nurhaida stated that in order to improve the capital market condition, the FSA is working with Self Regulatory Organizations (SRO) to increase the number of products and investors through the introduction of 35 economic policies package for financial market in the country.
The economic policies packaged aimed to create a stimulus for the growth of the national economy. Chairman of the commissioner board Muliaman Hadad said the policies are highly expected to quicken economic growth in a more stable manner.
The number of policies issued covering the banking industry as much as 12 policies, the capital market of about 15 policies, and four policies on non-bank financial industry and four of policies in the field of education and consumer protection.
“Those stimulus policies are expected to accelerate the growth of the nation’s economy and keep it growing to the targeted level, ” he added.
He noted some of the policies are restated, some are temporary (two years period) and some are new ones. All the policies would be effective in two years and his office would continue evaluating the efficiency of those policies.
Muliaman explained that some policies are aimed at making the financial industry as the locomotive that would pull up the national economy and encourage the economy to grow faster and stable, which will ultimately improve people’s welfare.
“These policies are believed to be able to maintain the growth of banks’ credit, capital market growth and development of non-bank financial industry in order to boost economic growth continued to grow on target,” said Hadad.
Bourse performances
In five years term, the public listed companies on the IDX had increased by 23 percent to 515 companies and is expected to increase to 536 companies by the end of the year. IDX targeting to list 30 firms in 2015 and so far only nine companies have been listed with total amount of funds generated from the IPO amounting to Rp8.99 trillion ($731.85 million).
Nurhaida said in eight months period, total rights issue in the local bourse reached Rp45.36 trillion from 10 companies and bonds issuance Rp45.36 trillion from 30 firms.
She added that three companies — PT Victoria Insurances, PT Valliant Offshore, PT Gelombang Seismic ready — are in the IPO proces and five companies will issue rights issue with worth around Rp12.73 trillion in the second semester of 2015.
Chief executive of IDX Tito Sulistio added that six public listed firms including PT HM Sampoerna Tbk (IDX: HMSP) will increase free-float shares to the market to comply with the regulation. IDX will also propose to the FSA to change the fraction of the share price from multiple three to five.
“We will send the proposal this week to the FSA to increase the investor base,” he said. (*)
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