REPUBLIKA.CO.ID, JAKARTA - The Indonesian Stock Exchanges' Analysts Association (AAEI) said some domestic market investors are now reviewing the fundamentals of the Indonesian economy in the light of sentiment created by the hike in Fed rate.

"Some investors have started examining the next economy's fundamentals, despite their expectations of credible ministerial cabinet (under President Joko Widodo's leadership)," said a member of the AAEI, Pardomuan Sihombing, on Thursday.

Sihombing added that the investors also looked at the performance of the listed stocks in the third quarter of 2014, and while growth was continuing, the performance was sluggish as shown by the volatile domestic index.

"Usually, ahead of the issuers' performance report, the Indonesian Composite Index (IHSG) climbs up. But on an average, it is estimated to grow by 15 percent or less than last year when it had reached 20 percent," he said.

Sihombing explained further that the market did not respond overwhelmingly to the sentiment created by the issuers' performance. The foreign investors were rather slow to react as they tend to halt the inflow. Even during the last few days, they recorded around 8 trillion IDR worth of net trading.

Echoing Sihombing, David Nathanael Sutyanto, an analyst at the First Asia Capital, said the market sentiment had turned into a review of fundamentals ahead of the hike in subsidized oil fuel price.

Sutyanto added that the plan to raise the subsidized oil fuel price, would in the long term improve the Indonesian economic fundamentals, but the government still needed to anticipate its short-term negative effects.

"The sentiment created by subsidized oil fuel price is quite crucial as it will have an impact on the inflation, and the market will therefore await policy action by the government to overcome the impact of the price hike," Sutyanto explained.

The market also waited for the government to make a commitment to push for infrastructural building in Indonesia once the price of subsidized fuel is raised.

Besides the domestic situation, Sutyanto said the market was also concerned about the global economic situation, related to the Fed's plan to raise the rate. The hike in the Fed rate could result in withdrawal of foreign funds from Indonesia, thus negatively impacting the stocks market.

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