Analyst: Foreign Funds Back in Second Half

Jakarta (Reuters) – The flow of foreign funds is expected to re-enter the domestic capital markets following a rise in interest rates by Bank Indonesia or BI rate to 6.5 percent, said a stock market analyst.
“Indonesia is the only country to raise interest rates amid slowing economic conditions the world is. Thing that will encourage the flow of foreign capital back to the Indonesian capital market in the second half,” said analyst Hamid Agustini Recapital Securities in Jakarta on Wednesday .
He added that funding opportunities foreign investors back to Indonesia’s capital market is quite large due to the current interest rates in the U.S. only by 0.25 percent.
“The purpose central bank to raise interest rates to attract foreign investors to remain invested their funds in Indonesia,” he said.
Moreover, he added, if the U.S. economic stimulus program was decided to be extended by the Fed that foreign funds will be returned to the country and rose to the level of 5,000 points.
Agustini adding he was optimistic BEI index still can reach levels above 5,000 points, sustained by the strengthening of the shares in the sectors of infrastructure, building construction, in particular sub-sectors of basic industries of cement, consumer, banking and finance.
Head of Research at PT Universal Broker Indonesia, Satrio Utomo said in the last four trading days, foreign investors began to re-enter the Indonesian capital market, although not yet significant. That’s because that sentiment is more external than domestic role.
“Moreover, later this evening, the Fed will provide testimony, expected to be seen from the direction of Fed policy for the second half of 2013, a positive for the market,” he said.
Satrio suggest in the next few days investors can collect banking sector stocks, consumer and construction sub-sectors. Investment strategy is accumulated when the stock price is declining

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