First Semester 2017, IHSG Up 9.8 Percent

The Indonesian Stock Exchange Composite Index (IHSG) strengthened by 9.8 percent in the first half of 2017, reaching its all-time high of 5,818 from its position on December 30, 2016. This increase outperformed the US Dow Jones index, which only rose by 8.34 percent, as well as Asian markets such as Malaysia (8.18 percent) and Tokyo (5.53 percent).

Economic growth of around 5 percent, a relatively stable rupiah exchange rate of Rp 13,000 per US dollar, and Indonesia's return to investment-grade status fueled an inflow of foreign funds into the Jakarta Stock Exchange, leading the IHSG to reach a new record high before the long Lebaran holiday. According to Bloomberg data, foreign fund inflows into the domestic stock market reached US$1.46 billion, while inflows into the bond market amounted to US$7.36 billion.

However, the IHSG's increase lagged behind Hong Kong's 17.5 percent gain and Seoul's 16.65 percent gain. Jakarta's strengthening also underperformed the Philippines, which recorded a 14.93 percent increase, and Singapore, which rose by 11.73 percent. The inflow of foreign funds and better economic growth compared to other regions resulted in overall gains for Asian stock markets in the first half of 2017.