India Leads Asian Stock Market Surge

The Bombay Stock Exchange (BSE) in India led the surge in Asian stock prices in Q1 2017. Bloomberg data shows that the S&P BSE Sensex 30 index recorded a 15.19 percent increase during the first quarter of 2017. An economy growing at over 7 percent was one of the drivers behind the rise in Indian stock prices. In second place, the Kospi index in Seoul rose 13.67 percent, and in third place, the Straits Times index in Singapore saw a 12.8 percent increase.

Meanwhile, the Jakarta Composite Index (IHSG) of the Indonesia Stock Exchange (IDX) only grew 5.67 percent in Q1 2017, reaching 5,596.84 by 9:20 WIB on March 31, 2017. The release of corporate financial reports for December 2016, corporate actions, and continued foreign fund inflows led the IHSG to repeatedly record new highs and attempt to break the psychological level of 6,000.

Compared to other Asian exchanges, the rise in the domestic stock index lagged. The already relatively high prices of Jakarta stocks, with several reaching their peak levels, caused investors to remain cautious in their stock hunting. The price-to-earnings ratio (P/E) of the Jakarta Stock Exchange currently stands at 26.74 times. This is higher than the P/E ratios of major Asian exchanges such as Tokyo (22.32 times), Hong Kong (13.36 times), and Singapore (13.11 times). Investors should be wary, as the domestic exchange is vulnerable to profit-taking as the financial reporting season ends and the index is already at its highest level.