Jakarta. The composite share price index of the Indonesia Stock Exchange (IDX) saw a minor dip of 0.17 percent, reaching 7,260 in the early stages of trading on the first day of the new year. Investors are keenly monitoring the release of inflation data later in the day.

Vice President Ma'ruf Amin officially opened the first day of stock trading in 2024 at the IDX. Ma'ruf Amin said that 2023 was marked by various challenges, but Indonesia successfully navigated through them.

"In a period where many countries experienced economic turbulence due to inflationary pressures, commodity price fluctuations, and geopolitical fragmentation, Indonesia managed to overcome these challenges. It underscores the need for anticipation and a flexible, measured, and reliable policy response, particularly in the fiscal and monetary domains," he said on Tuesday.

Analysts at NH Korindo Sekuritas Indonesia Research predict that today's trading volume will stay relatively subdued, indicating the potential for the index to test its closest support level at 7,220. 

"After a two-month upward trend, the index seems to be entering a consolidation phase," NHKSI wrote in its research note on Monday. A total of 1.6 billion shares, valued at Rp 628.5 billion, exchanged hands in the first 15 minutes of trading.

As investors and traders kick off the trading year in 2024, attention is turning to December's inflation data, projected to be at 2.72 percent year-on-year, a slight decrease from November's 2.86 percent. Core inflation is also expected to ease slightly to 1.85 percent year-on-year.

Global markets are closely monitoring signals from the US Federal Reserve, with expectations of rate cuts starting in March. Investors are pricing in over 150 basis points of easing by the Fed, the European Central Bank, and the Bank of England in the coming year.

According to a research projection by RHB Sekuritas, the index is anticipated to reach 7,900 in 2024, driven by the expectations of interest rate reductions and a peaceful 2024 general election. Historically, the index has demonstrated volatility in the year preceding elections, often followed by an upward trend in the subsequent years.

RHB is also anticipating a 50 basis points reduction in Bank Indonesia's (BI) interest rates in the second half of 2024, which could assist the banking sector in managing costs more efficiently. Interest rate cuts also have the potential to boost the net interest margin of the banking sector.

RHB maintains its projection for Indonesia's Gross Domestic Product (GDP) growth in 2024 at 5 percent, with private consumption expenditures as the main driver. Additionally, the Rupiah is expected to gradually strengthen to the range of Rp 15,000 to Rp 15,600 against the Dollar.

Another contributing factor is the expectation of economic recovery in China. RHB believes that China's economic rebound will benefit Indonesia's basic metal sectors, such as copper and nickel, along with an increased demand for paper packaging.

Looking back at 2023, the IDX displayed robust growth of 6.1 percent, closing at 7,272. The capitalization of Indonesia's stock market reached Rp 11,762 trillion, reflecting a 23.82 percent year-to-date increase compared to the end of 2022 at Rp 9,499 trillion. By December 28, 2023, the total number of investors in Indonesia's capital market reached 12.15 million, indicating a 17.16% year-to-date increase from the end of 2022. 
 

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