Indonesia is the best APAC market so far in 2022

Although the Jakarta Composite index of Indonesia may have encountered a few hiccups in 2022, as of Monday’s close, it had the best performance of any major Asia-Pacific index for the year. Since the beginning of the year, the index has increased by 6.51%.

In contrast, this year has seen more than a 25% decline in the Hang Seng index in Hong Kong, the Kospi in South Korea, and the Taiex in Taiwan. Shanghai Composite and Shenzhen Component in mainland China have also taken a beating, falling by almost 17 and 27%, respectively. The Nikkei 225 in Japan, the Nifty 50 in India, and the SET index in Thailand did better, all of which had losses in the single digits.

With a decline of just 0.53 percent, Singapore’s Straits Times index was the second-best performance in the area. The Jakarta Composite index experienced significant declines in May and July before catching up again. Since early August, it has maintained a position above the 7,000 mark.

The index has increased due to foreign stock investment, and Indonesia is profiting from rising commodity prices since it is a commodity exporter.

Following the removal of Covid limitations, the economy there has been recovering more quickly than in developed economies, despite this boost occurring sooner for them. Even with a significant rebound from a low base in 2021, the Indonesian market’s 2022 earnings growth remains strong.

Commenting to a news agency on the issue, a DBS staff claims that although the U.S. Federal Reserve’s interest rate hikes and a strong dollar have caused withdrawals of government bonds this year, the firm is nevertheless enthusiastic about Indonesia.

“The valuation may look expensive [compared with] other countries but it can be justified given Indonesia’s outlook and growth,” he said. However, according to other regional experts and analysts, declining commodity prices are a source of worry for Indonesia.

Some analysts have cautioned that Indonesia in general and the energy industry, in particular, should be approached with caution and prudence, given the drop in energy prices.