Jakarta. Seasoned businessman Jusuf Hamka has floated plans to buy up to Rp 5 trillion (around $277 million) in shares amid Indonesia’s ongoing market crashes, but the proposed purchase has met with skepticism.

Jusuf Hamka, popularly known as Babah Alun, recently announced he had set up a consortium of investors that would buy up to Rp 5 trillion in shares at the now-struggling Indonesia Stock Exchange (IDX). Indonesian stocks had been in free fall after index provider MSCI threatened a downgrade that could leave Jakarta out of the main indices tracked by global funds. However, equity market analyst Hendra Wardana doubted that Jusuf Hamka’s plan would be an instant cure, as its effectiveness would hinge on other domestic investors.  

“Investors will still assess the company's prospects, ability to generate profits, economic conditions, and overall market risks,” Hendra, who also founded the market education platform Republik Investor, said.

“If the consortium's purchase only causes some stocks to strengthen, while the majority go weaker and selling pressure stays high, we can’t call it a ‘healthy trend reversal’.”

He went on to say that the market needs wider buyer participation, not just relying on one cash-loaded group of investors. Hendra urged market authorities to turn MSCI’s threat into a momentum for reforms. He added: “The IDX and the financial watchdog OJK should prove that [domestic] transparency, accountability, and capital market governance have really improved.”  

Jusuf Hamka, who has been a household name in the tollway business, admitted that he had a huge interest in Indonesian banking shares. The big purchase is expected to take place on Monday.

“I see many blue-chip stocks that provide decent dividends — for instance, Bank Mandiri [BMRI], BRI [BBRI], BNI [BBNI], and BCA [BBCA],” he said. 

According to his calculations, the decline in share prices has made the potential dividend yields of several banking stocks more attractive than the interest rates on bank deposits.

As a case in point, BMRI used to trade within the Rp 6,000 and Rp 7,000 range, but subsequently fell to the Rp 3,300–3,400. Assuming a dividend of approximately Rp 450 per share, Jusuf estimates that the potential dividend yield could approach 12% if the shares are purchased at a price of around Rp 3,500.

“This is better than a bank deposit. Bank Mandiri is a state-owned bank. You can rest easy and sleep soundly,” he said.

Pluang Maju Sekuritas research head Jason Gozali believes that this sharp correction creates an opportunity to invest in large-cap banking stocks, including BMRI. According to him, the market turbulence reflects a shift in sentiment rather than a change in the companies' fundamentals.

“But we don’t recommend going all-in at once,” Jason said, while warning about the persistent market uncertainty.

Last Friday, MSCI announced that they were now weighing stripping Indonesia out of the “emerging” market status and moving it to the “standalone” group instead, sparking market fears. Indonesian stocks also sank below the psychological 5,000 level on Monday, down 4.31% to 4,961.

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