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This Causes the JCI to Mager Even though Foreigners Buy Rp. 1 T of Shares

This Causes the JCI to Mager Even though Foreigners Buy Rp. 1 T of Shares

Andrianus.my.id - Dewi Fortuna is still not in favor of the Indonesian stock market this week. The Composite Stock Price Index (IHSG) fell 0.41% the last week.

In the last five trading days, JCI only strengthened 2x and the rest experienced corrections. The index is still trapped in a sideways pattern in the range of 7,000-7,100.

In yesterday's trade, Friday (26/11/2022), the JCI closed down 0.39% at 7,053.15. Foreigners have again released their shareholdings in the country.

Foreigners net sold Rp 233 billion yesterday. However, in the past week, net buys of nearly IDR 1 trillion have been observed by foreigners.

Sentiment of a smaller rise in the US benchmark interest rate was not able to become the driving force for the JCI above 7,100.

Even though the JCI has been sideways since the end of October 2022, the performance of the domestic stock market is still superior compared to stock exchanges in other countries. So far this year, the JCI still provides a return of 7.17% and is ranked 1st in Asia Pacific and ranked 4th in the world.

In fact, apart from the risk of tightening US monetary policy, the world is also facing another threat, namely reflation. Governor of Bank Indonesia (BI) Perry Warjiyo revealed, there are 5 things that characterize the economic turmoil this year and next year. This turmoil will make global economic conditions still in a worsening condition.

The first characteristic, he said, is slowing global economic growth and there is even a risk of a recession in a number of countries. It is estimated that the world economy will grow 3 percent this year and will decrease to 2.6 percent in 2023

"There are even risks to 2 percent, especially in the US and in Europe. A recession in the US and in Europe. A recession in the US has a probability close to 60%, especially in Europe, even this year's winter conditions are not the worst yet, next year will be the worst because of this related to geopolitics, economic and investment political fragmentation, slow growth," said Perry.

The second thing is high inflation. According to him, world inflation will reach 9.2 percent this year. In the United States it is close to 8.8 percent, Europe is 10 percent and in the UK it is close to 11%.

The third is what he calls higher interest for longer. This means that there will be conditions of high interest rates and will last a long time. In the US, the increase in the Fed Funds Rate has increased 75 bps this month to 4%.

The fourth condition is the continued strengthening of the dollar or strong dollar. The last few days the dollar index against major currencies or dxy he said had reached 114. In the current year it has strengthened almost 25%.

The fifth condition is the phenomenon of cash is the king. This is because the investment risk in the portfolio is very high so that the perception among investors is that it is better to withdraw their investment funds from emerging market countries to developed countries.

With unfavorable conditions, it is only natural that price movements of financial assets are still restrained. Investors tend to play it safe rather than take risks.

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