(Bloomberg) -- Indonesian stocks are coming back with a vengeance.
While most of the world’s equities have dropped over the last three days, the Jakarta Composite Index has rallied 3.7 percent for the top gain among Asian equity gauges. On Thursday, the Indonesian benchmark measure closed up 2.7 percent after foreign investors returned to the market the day before following 21 straight days of outflows.
For Wilianto Ie, President Director of PT Maybank Kim Eng Securities, it’s a sign of better days ahead.
“The money flow has to come back to Indonesia,” Ie said. “I’m optimistic about the outlook as foreign outflows have subsided and many of the negative concerns about Indonesian stocks have been addressed.”
He sees a jump in auto sales and improvement in retailers’ results as a signal consumer spending is rebounding, while an unexpected trade deficit in April was proof that local businesses are confident about future sales. He expects the Jakarta Composite to reach 7,100 -- if not by the end of this year, at least by next June.
Stocks extended gains as new Bank Indonesia Governor Perry Warjiyo pledged on his first day on the job to take more pre-emptive measures to maintain stability. The currency gained 0.5 percent to 14,135 a dollar.
After two years of annual gains surpassing 15 percent, Indonesia’s benchmark index crashed, losing as much as 14 percent since its February peak. That’s pushed its valuation back to 14.6 times estimated earnings, around its five-year average, data compiled by Bloomberg show. That compares with 11.8 times for the MSCI Emerging-Markets Index.
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