Great Sale

The biggest challenge in June 2024 was the pressure on the exchange rate. The depreciation of the Rupiah was driven by the elevated Fed rate due to a strong US economy. This issue affected not only the Rupiah but also other emerging market currencies. Additionally, domestic challenges contributed to the weaker exchange rate. The market was concerned about the expansionary fiscal policy of the incoming government, which could increase the debt ratio and widen the budget deficit. However, the current finance minister and the elected government have assured that the debt ratio and state budget will remain prudent and stable. The Rupiah has since stabilized, and there is potential for it to strengthen in the second half of 2024.

The stock market experienced a “great sale,” with the JCI index excluding seven stocks falling below 6,000 with a PE ratio as low as 8.6x. This presented a significant buying opportunity for investors, as the current economic fundamentals remain sound without major pressures like those during the pandemic or economic crises. Our target for the JCI index in 2024 is 7,400 at a PE ratio of 14.8x. We believe now is an opportune time to add more domestic equity funds because of the compelling valuation and the clear bottom of the correction, offering more upside potential than downside risk. We expect most stocks, particularly large-cap ones, to recover by the second half of 2024.