JCI Projection: Trailing Bank Shares

TRIBUNMANADO.CO.ID, JAKARTA – Composite index of stock prices (IHSG) over the weekend, Friday (29/6), 2% to 5,799. The strengthening was a response to the expectations of a stable rupee after Bank Indonesia (BI) raised the benchmark interest rate by 50 basis points

However, the strengthening was only only temporarily. "The index should weaken again," said Juan Harahap, badyst at Artha Sekuritas Indonesia, Friday, June 29, 2006. The increase in the interoperability rate could strengthen the sectors sensitive to interest rates. The pressure is growing stronger after the TVL waiver policy has the potential to further depress the bank margin. Because of the weight of bank stocks against the strong JCI, Juan predicts JCI earlier this week, Monday (2/7), will weaken with a range of 5.763-5.870.

Economic fundamentals such as inflation data at the moment are needed. The government will publish data on inflation. "Inflation should be under control, thus providing a positive sentiment," said Vice President of Research Department, Indosurya Bersinar Sekuritas, William Surya Wijaya. JCI will go up with the 5.640-5.958 range. The actions of HMSP, SMRA, SRIL and SMCB are worth considering

Rising benchmark interest and rising financing costs

Bank Indonesia hacks again 50 basis points of BI repo rate of 7 days (BI-7DRR) at the end of last month at 5.25%. The finance sector becomes one of the sectors considered affected

The rise in the benchmark interest rate will cause the interest rates borrowed by banks to rise to banks. Thus, the cost of funds that can be obtained by the finance sector also increases.

According to the president of the Association of Indonesian Financing Companies (APPI) Suwandi Wiratno, about 60% to 70% of the funds multifilanced banks. The evolution of bank interest rates will impact the burden of the cost of funds that must be borne.

In fact, the effect of rate hikes usually does not stop at bank loans. This increase in interest rates will have an impact on the movement of bond coupons issued by multiple finance companies.

Similarly, general manager of PT Indosurya Inti Finance Mulyadi Tjung said that after BI has raised interest rates repeatedly, the cost of funds may also participate. "The cost of the fund is likely to increase," he said.

Even so, he said, the impact of this increased financial burden will not be felt in a short period of time. Because the funding plan for this year has been prepared from last year while using the old flowers.