May 07, 2025
Interpreting Our Latest GDP Growth

Market Commentary
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JCI has shown a strong recovery in recent weeks, climbing to 6,898.20 as of early May 6th. The persistent gain from the previous trading days are indicating continued investor confidence. After experiencing a significant dip in March, the index has maintained a steady upward trend through April, supported by consistent buying interest.

Earlier in the year, the index faced volatility and downward pressure, particularly from late February to end of March. This was likely due to a combination of external macroeconomic uncertainty such as the tariff announcement by Trump, as well as domestic negative sentiment. However, the sharp rebound starting in late March suggests renewed optimism.
 
JCI Recent Performance


Meanwhile, Indonesia's economy grew by only 4.87% (YoY) in 1Q25 (vs 5.02% in 4Q24), below our projection and market consensus of 5.00% and 4.90%. This GDP growth is the lowest since 2015, excluding pandemic years in 2020-2021. Furthermore, the pillar to economic growth, namely household consumption grew slower despite having numerous festive season such as long holidays (weekends) and Ramadan & Eid holidays. The notable highlight is the agriculture sector that became the biggest economic growth driver in 1Q25, mainly due to successful harvest season.

We believe the slower exports growth was due to moderating commodities prices recently. Latest data on slowing domestic consumption point to the government’s efficiency program as a key factor, reflected in contractions in government spending and a deceleration in household consumption growth.
 

As the GDP has shown week growth, we believe it is wise to be very cautious in going long any stocks. Strong cash position and solid fundamentals has to be the main criteria in filtering stocks.

As Bank Indonesia starts easing the monetary policy, pushing the liquidity expansion, this is likely to be followed by a rebound in domestic consumption. Should it happened, JCI is likely to have more strength to go further higher.

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