The Jakarta Stock Exchange (IDX Composite) index is hovering near its record high as investors wait for the upcoming general election. The index, which tracks the biggest companies in Indonesia, reached its all-time high of IDR 7,402 last week. It was trading at IDR 7,326 on Monday.

Indonesia stocks have done well in the past few years, helped by the ongoing economic growth. The economy is expected to report a full-year GDP growth of 5%, slower than the previous year’s 5.2%. Economists expect the economy will continue doing well this year.

There are several catalysts for the IDX Composite index in 2024. For one, economists expect the Bank of Indonesia will start cutting interest rates in mid this year. It has maintained rates intact at 6.0% in the past few meetings. 

Indonesia’s inflation has been in a downward trend in the past few months. It peaked at 5.95% in 2022 to 2.61%. This trend will likely continue in the coming months as the prices of key goods move lower.

Therefore, a combination of falling inflation and slowing economic growth means that the central bank will likely start to cut rates. It will join other global central banks like the Federal Reserve, Bank of England (BoE), and European Central Bank (ECB) that are expected to do the same.

The IDX Composite index will also be impacted by the overall economic growth as foreign investors move in. As the biggest economy in the south-east Asia, it has attracted many foreign investors. 

The most recent data shows that the number of investors in the capital market has risen from 1.7 million in 2017 to over 12 million. Also, the total deposits jumped by 35% to over $529 billion as the number of bank accounts rose to 535 million.

The next key catalyst for the IDX Composite is the upcoming election, which is scheduled for Valentine’s Day. The key contenders are Defense Minister Prabowo Subianto, Gibran Rakaburning Raka, and Anies Basweda.

The best-performing companies in the IDX Composite index in the past 12 months were Estika Tata Tiara, Indo Boga Sukses, and Akba Indomakmur. All these shares have surged by more than 283%.

IDX chart by TradingView

The weekly chart shows that the IDX index has been in a strong uptrend in the past few months. It has risen in the past eight straight weeks and is hovering near its all-time high. The index has remained above the 50-week and 25-week Exponential Moving Averages (EMA). It is also sitting at an important level since this was its highest swing in April and September 2022.

Therefore, the outlook for Indonesia stocks is still bullish, with the next level to watch being at IDR 7,500. Nonetheless, it could show some volatility ahead of the election.

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