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Market predictions for the week of 3-7 February 2025 indicate a positive movement with 8 sentiments that will drive it, despite the recent weakening trend in the Indonesian Stock Exchange (IHSG) over the past week. Photo/Courtesy
Overview
The market for the upcoming week, from 3-7 February 2025, is expected to show positive movement driven by 8 sentiments. Despite a slight decrease of -0.79% in the IHSG and an outflow of Rp521.4 billion in the regular market in the past week, analysts are optimistic about the market outlook.
Market Sentiments
Equity Analyst at Indo Premier Sekuritas (IPOT), Imam Gunadi, highlighted several catalysts or sentiments that influenced the IHSG movement in the previous week:
NBS Manufacturing PMI
The Manufacturing PMI in China for January 2025 decreased to 49.1 from 50.1 in December, falling below the consensus of 50.1. This contraction, the first in five months, was driven by a decline in factory activity ahead of the Chinese New Year, with both output and new orders experiencing significant drops.
Imam emphasized that China is a major trading partner for Indonesia, especially for commodities such as coal, nickel, and palm oil. A weakening manufacturing sector in China could reduce the demand for raw materials from Indonesia, potentially affecting export prices and volumes.
Fed Interest Rate Decision
The Federal Reserve (The Fed) maintained the benchmark interest rate in the range of 4.25%-4.5% in the January 2025 meeting, in line with market expectations. Fed Chair Jerome Powell stated that the central bank is not in a hurry to further lower interest rates and wants to see more progress in controlling inflation.
“With the Fed’s high interest rates, foreign capital inflows to developing countries like Indonesia could be limited as investors continue to prefer high-yield assets in the US. The rupiah may face pressure if foreign funds flow out of the bond and stock markets,” explained Imam.
Foreign Direct Investment
Foreign Direct Investment (FDI) plays a crucial role in the Indonesian economy, contributing to economic growth, job creation, and technology transfer. In recent years, Indonesia has seen a steady increase in FDI inflows, indicating confidence from foreign investors in the country’s business environment.
However, global economic uncertainties, geopolitical tensions, and policy changes can impact FDI flows. It is essential for Indonesia to maintain a conducive investment climate, streamline regulations, and promote transparency to attract more foreign investments.
Market Outlook
Despite the challenges and uncertainties in the global economy, Indonesia’s stock market remains resilient. The government’s efforts to boost economic growth, attract investments, and improve infrastructure are expected to support the market’s performance in the long run.
Investors are advised to stay informed about market developments, monitor key economic indicators, and diversify their portfolios to mitigate risks. By staying proactive and adapting to changing market conditions, investors can navigate through volatility and capitalize on opportunities.
