Dewi Yunita

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Outlook Composite stock price index

Wall Street stocks slumped at the close of last trading in 2016, Friday last local time.
Investors took profit taking in almost all sectors, after the release of Chicago's Chicago area
manufacturing activity index of 54.6, lower than the 56.8 forecast and the previous month's
57.6, which became the latest US economic data released in 2016 Dow Jones fell 57.18
points (-0.29%) to 19,762.6, S & P 500 fell 10.43 points (-0.46%) to 2,238.83 and Nasdaq
shrank 48.97 points (-0, 9%) to 5,383.12. Over the past week in 2016, US stocks fell with
Dow Jones down -0.86%, S & P500 slump -1.1% and Nasdaq -1.46% decrease. While for the
whole year 2016, Dow Jones rose + 13.4%, S & P 500 increased + 9.5%, and Nasdaq rose +
7.5%.

Meanwhile, from within the country, after rising sharply in the first 3 days of trading last
week, JCI finally closed slightly 5.85 points (-0.11%) to 5,296,711. Foreign investors
recorded a net sell of Rp. 171 Billion in the regular market. In a week that lasted 4 trading
days, JCI managed to rise sharply + 5.35%, with foreign investors recorded net sell of about
Rp. 686 billion in the regular market. For the whole year 2016, JCI posted a gain of +
15.32%, with foreign funds coming into the stock around Rp. 3 Trillion on the regular
market.

Throughout the year 2016, JCI recorded a very good performance. JCI managed to occupy
the second best stock market in Asia Pacific region under Thailand. If we flashback by
looking back to the performance of IHSG throughout 2016, it appears that JCI is moving in
an uptrend. From the beginning of the year to the end of August, the JCI has continued to rise
due to the rebound in world commodity prices and the government's success in implementing
the first-ever tax amnesty program. Entering September to early November, IHSG moves
sideways. New mid-November JCI suffered a massive correction, after the election of Donald
Trump as US President surprisingly and followed by the increase in interest rates of the Fed,
as well as political disturbance from within the country, making the JCI tend to weaken until
the end of the year. But in the last week before the close of the year-end trading, JCI managed
to rebound quite significantly driven by the action of window dressing.
Then what about JCI estimates throughout 2017?

Entering the 2nd year of Jokowi-JK government journey, the national economy managed to
regain its growth momentum. After 2015 the national economy only grows 4.79%, then in
2016 the Indonesian economic condition starts to improve by returning to the right track.
Indonesia's economy is estimated to grow in the range of 5% -5.1% in 2016. While for the
year 2017 according to the government, BI, Bappenas, World Bank and IMF, the Indonesian
economy is predicted to grow in the range of 5.1% to 5.4%. With sustained economic growth,
the JCI is believed to be able to grow again in 2017 this year.

The realization of the result of government economic policy package and tax amnesty is
expected to begin to show the result and can boost economic growth this year. The domestic
consumption sector, foreign investment in the real sector and infrastructure development, will
still be a major driver of Indonesia's economic growth. While the commodity prices are
recovering as the price of oil increases, it is expected to boost the mining sector.

As we know, the price of oil has passed its lowest point. At the beginning of last year world
oil prices had dropped to the range of US $ 26 / barrel. But at the close of trading late 2016
yesterday, able to close at the level of US $ 53.9 / barrel, thanks to the lack of cuts in OPEC
and non-OPEC production starting January 1, 2017. According to some analysts, the price of
oil will strengthen the range of US $ 60-70 / Barrel this year.

Meanwhile, the challenge for this year's JCI comes from global uncertainty. The plan to raise
the Fed's benchmark rate to three times, US president-elect Donald Trump's policy, the
continuing slowdown in China's economy as Indonesia's main trading partner and the
continuation of brexit expected to begin to be felt by the euro zone by the middle of this year
and global terrorism, Became a negative sentiment that affected the movement of JCI. While
from within the country, the political dynamics ahead of the election, especially Jakarta will
still hold the market until mid-February. Not to mention the potential rise in BI interest rates
following the rise in the fed rate, and the potential for rising inflation due to rising fuel prices,
cigarette and electricity taxes, will be a factor in JCI. Another factor is the lack of revenue
from taxes, which has an impact on the decrease in government spending and consumption.