GLOBAL FINANCIAL CRISIS: THE BUBBLE EFFECT IN INDONESIA

  • Mohammad Benny Alexandri Universitas Padjadjaran, Bandung
  • Raeny Dwisanti
Keywords: global financial crisis, bubble economy, stock market, Indonesia

Abstract

US and Indonesia stock markets are entering record heights without being offset by economic growth
and profitability growth of their traded companies. There are several indicators for the stock market
bubble: (1) Price Ratio (Ear Ratio); (2) Price Ratio / Book (PB Ratio), the latter comparing the
nominal price of one share at a market with the book value (the value of company's assets). The
current PB ratio of the composite stock price index being 3.3 means that for each shares the asset
value of which is 1 IDR, the stock would be worth 3.3 IDR. This is one of the most expensive price in the world today. Based on the above, for Indonesian stock market sharp decline is just a matter of time and waiting. This decline will be much sharper if triggered by the US financial crisis. We can also also see a bubble emerging from increasingly irrational investment attitudes. Currently, in addition to high prices for stocks and bonds, investors have started looking at investment opportunities in digital currencies. This research tries to know the potential of financial crisis and its
effect for the financial market in Indonesia. 

Author Biographies

Mohammad Benny Alexandri, Universitas Padjadjaran, Bandung

Ph.D.
Lecturer in University Padjadjaran, Bandung, Indonesia
Research interests: strategy management, financial markets, corporative finance

Raeny Dwisanti

PhD, Lecturer in University Komputer, Bandung, Indonesia
Research interests: marketing, retail, corporative image and social responsibility, HRM

References

BPS (National Statistic of Indonesia) 2008, 2009, 2010, 2011, 2012, 2013.

Berg A., Papageorgiou C., Pattillo C., Schindler M., Spatafora N., Weisfeld H.,. (2011). Global Shocks and Their Impact on Low-Income Countries: Lessons from the Global Crisis. DIIS Working Paper 2011:07.

Stiglitz J. (2002). Globalisation and Its Discontents, London Allen Lane.
Published
2018-11-30
How to Cite
Alexandri, M., & Dwisanti, R. (2018). GLOBAL FINANCIAL CRISIS: THE BUBBLE EFFECT IN INDONESIA. The EUrASEANs: Journal on Global Socio-Economic Dynamics, (6(13), 27-33. https://doi.org/10.35678/2539-5645.6(13).2018.27-33