(Dec 30): Indonesian stocks recorded their best performance in 11 years, as the growing presence of local retail investors more than offset foreign fund outflows.
The Jakarta Stock Exchange Composite Index was up about 22% this year, the most since 2014. It tracks gains in most regional peers, with the MSCI Asia Pacific Index advancing 26% during the period.
Behind the rally this year was the increased participation of Indonesian retail investors, who were hungry for better returns after a series of interest-rate cuts drove down bond yields. Their buying of typically speculative stocks, including those linked to the nation’s billionaires, defied the weak sentiment among foreign investors worried about lacklustre economic growth and the risk of bloated state spending.
A combination of factors, including higher loan growth and rising domestic institutional investors’ participation amid low fixed-income returns, would further support stocks, said Ahmad Mikail Zaini, chief economist at PT Sucor Sekuritas in Jakarta. The brokerage expects the JCI to reach 11,000 next year, representing a 27% rise from the current level.
The gauge was closed little changed on Tuesday (Dec 30), the last trading day of the year.
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Foreign funds have pulled a net US$1 billion from Indonesian equities this year, the most since 2020. During the same period, the number of retail investors in the country grew about fivefold to over 20 million, according to the Indonesia Stock Exchange.
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