Warning: Jakarta Stock Exchange Share Prices Are Already High

Stock prices on the Indonesia Stock Exchange (IDX) are quite expensive. Bloomberg data shows that the price-to-earnings ratio (P/E ratio) on the Jakarta exchange has reached 24.53 times. This is the second highest after the Shenzhen exchange, where the P/E ratio has reached 44.28 times. This means the Jakarta exchange's P/E ratio is above that of major Asian exchanges such as Tokyo, Hong Kong, and Singapore.

The release of financial reports, dividend distributions, and corporate actions by issuers have triggered a rise in the stock index, setting a new record high of 5,540.43 on March 17, 2017. Several issuers announcing dividend plans for the 2016 fiscal year were one of the triggers for the rise in stock prices, especially state-owned enterprise (SOE) stocks.

On Tuesday, March 22, 2017 (until 10:09 WIB), the IHSG rose 10.92 points (0.2 percent) to 5,544.91. Although it still has the potential to rise, the index is vulnerable to profit-taking near its highest level reached last week. Investors should be cautious before buying stocks to avoid being trapped at high prices. Meanwhile, the rupiah exchange rate traded slightly weaker by 0.01 percent to Rp 13,331.6 per US dollar.