Caution: Jakarta Stock Exchange Prices Are Already High

28/09/2016 17:27 WIB

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Asia Stock Market Price-to-Earnings Ratio (P/E) as of September 28, 2016

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Asia Stock Market Price-to-Earnings Ratio (P/E) as of September 28, 2016

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Jakarta's stock prices are the second most expensive in Asia after Shenzhen, China's stock exchange. This is evident from the price-to-earnings ratio (PER) of the Indonesia Stock Exchange (IDX), which reached 26.73 times on September 28, 2016, according to Bloomberg data. This means that stock prices on the Jakarta exchange are 26.73 times the issuer's earnings, only lower than Shenzhen's stock prices, which are 45.42 times.

The sluggish economy has slowed the growth of issuer earnings while stock prices continue an upward trend. The Composite Stock Price Index (IHSG) breaking the 5,400 level has resulted in a relatively high PER for the Jakarta exchange. Investors need to be wary of this to avoid being trapped buying at high prices.

The upcoming release of company financial reports for the third quarter of 2016 will provide investors with guidance for their investments until the end of the year.

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."