2016, IHSG Still Records a 10 Percent Increase

The Jakarta Composite Index (JCI) of the Indonesia Stock Exchange closed at 5,042.87 on December 22, 2016, representing a 9.79 percent increase from its year-end 2015 position of 4,593. However, already high stock prices and negative sentiment from external factors prevented the JCI from breaking the 5,500 level.

Domestic economic growth of around 5 percent, falling interest rates, and controlled inflation supported investor optimism in the Jakarta stock market. The JCI even reached its highest level of 5,472 on October 4, 2016. Furthermore, the stable Rupiah exchange rate and rising commodity prices, driven by crude oil prices exceeding US$50, kept the JCI in positive territory.

However, in the final three months of 2016, regional markets experienced selling pressure, beginning with Donald Trump's election as President of the United States, replacing Barack Obama. His protectionist policies, expected to impact the global economy, caused fund managers to withdraw from the market. The further anticipated Federal Reserve interest rate hikes continuing into 2017 also made investors more cautious about entering the market.