One of the leading global credit rating agencies, Standard & Poor's (S&P), decided to keep Indonesia's sovereign rating at BBB-/stable outlook (investment grade status). This is a positive message considering Indonesia has recently been under heavy pressure amid volatile global capital flows. Meanwhile, Indonesia's current account deficit (CAD) widened significantly in the first quarter of 2018. Indonesia's current account balance (which turned into a structural deficit since late-2011) is among the concerns shared by credit rating agencies.

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In the already busy initial public offering (IPO) month of May, two more companies were added to the Indonesia Stock Exchange on Wednesday (23/05): (1) Sarimelati Kencana, the operator of the Pizza Hut chain in Indonesia, and (2) Guna Timur Raya, an integrated logistics solutions provider. This brings the total number of IPOs in Indonesia so far in 2018 to 16. In May alone a total of seven companies made their trading debut on the Indonesia Stock Exchange. Thus, Indonesia is on track to set a new record in terms of IPO realizations this year.

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The Indonesian government set a 80 percent cap on foreign ownership in Indonesian insurance companies through Government Regulation No. 14/2018 on Foreign Ownership of Insurance Companies. Suahasil Nazara, Fiscal Policy Head at Indonesia's Finance Ministry, said foreigners can remain controlling a big stake (up to 80 percent) in the domestic insurance industry because it is believed that domestic insurance players still need the knowledge and capital that strategic foreign investors bring from abroad.

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For the first time in four years Bank Indonesia opted for monetary tightening by raising the benchmark interest rate (the 7-Day Reverse Repo Rate) by 25 basis points (bps) to 4.50 percent. Also the deposit facility and lending facility rates were raised by 25 bps to 3.75 percent and 5.25 percent, respectively (effective per 18 May 2018). This latest move is part of Bank Indonesia's efforts to maintain economic stability amid the high degree of uncertainty in global financial markets.

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