Indonesia stocks set to hit record, boosted by commodity gains

INDONESIA’S benchmark stock index was on track to rise to a fresh record on Tuesday (Sep 6), thanks to elevated energy and commodity prices.

The Jakarta Composite Index climbed as much as 0.8 per cent to 7287.7 points, set to surpass the previous record set in April. Energy and industrials sub-gauges were the best performers.

Funds are flocking to South-east Asia where less aggressive interest-rate hikes have helped burnish the appeal of local equity markets. Bank Indonesia began tightening only last month with a quarter point hike, and its stocks are Asia’s best performing major equity market so far this year.

Shares of Indonesia’s raw-material firms have climbed on the back of a global shortage of commodities as supply struggles to keep pace with demand amid the reopening of economies.

“Commodity and energy stocks with good financial reports, especially coal, are expected to continue to book higher profits and dividend distributions are certainly attractive,” said Panin Asset Management Director Rudiyanto. “But some commodity prices have begun to fall and high price increases have made investors more cautious.”

Sentiment has also been boosted by the nation’s annual budget unveiled last month, which included plans to shrink the budget deficit and return growth to pre-pandemic levels. BLOOMBERG