Indonesian stocks have significantly outperformed their Thai counterparts, establishing the widest market-value gap on record in December. The Jakarta Composite Index, the equities benchmark for Southeast Asia’s largest economy, saw a 0.7% rise, reaching a record high on Tuesday. This surge resulted in a market-value gap over Thai stocks, the second-largest economy in the region, expanding to as much as $258 billion last month, the most significant difference observed since at least 2003, according to Bloomberg data.
The remarkable performance of Indonesian stocks is attributed to positive sentiments surrounding the nation’s central bank and expectations that economic policies will remain stable despite an upcoming election and potential changes in administration. Over the past year, the value of Indonesian shares has surged by approximately 25%, while Thailand’s stocks have experienced a 12% decline due to prolonged political uncertainties and disappointing economic growth.
In 2023, Indonesian companies witnessed a 58% increase in funds raised through initial public offerings, totaling about $3.5 billion, according to data compiled by Bloomberg. Additionally, international investors displayed confidence in Indonesian stocks, injecting a net sum of $497 million into the country’s equities in December, marking the highest inflow since April.
The contrasting political climates in Indonesia and Thailand have played a pivotal role in shaping the divergent trajectories of their respective stock markets. While Indonesia benefits from the anticipation of the central bank concluding rate hikes and a continuity of economic policies amid an upcoming election, Thailand grapples with a political stalemate and lackluster economic growth.
As Indonesian stocks continue to shine, the widening market-value gap underscores the resilience and attractiveness of the nation’s equities in the Southeast Asian region. The positive investor sentiment and robust economic indicators position Indonesia as a standout performer in the evolving landscape of regional stock markets.
