During most of the day, Indonesia's benchmark stock index (the Jakarta Composite Index or IHSG) moved in the green zone, seemingly unaffected by falling indices on Wall Street on Wednesday (26/03). However, just before the trading day closed market participants engaged in profit taking causing the 0.11 percent decline of the IHSG to 4,723.06 points. It is difficult to pinpoint the exact reason for this occurrence. Perhaps because Asian indices turned mixed after China's benchmark index fell as China's latest industrial profit growth data were weak.
China's industrial profit grew 9.4 percent (year on year) in February, down from 13.2 percent in December. By sector, coal mining posted the largest fall in profit growth of 42.5 percent, followed by the steel industry with a growth contraction of 26.1 percent.
Another reason why investors may have engaged in profit taking is that they prefer to wait and see for several Indonesian economic data before purchasing more Indonesian stocks. On Tuesday 1 April 2014, Statistics Indonesia will release Indonesia's March inflation rate and February trade statistics (which will shed more light on the country's current account deficit).
Japan's Nikkei, on the other hand, was up on the continued depreciation of the yen against the US dollar and strengthening retail stocks as Seven & I Holdings Co's stocks jumped 5.1 percent as it was reported that the retailer will take control of hundreds of shops in train stations (in partnership with West Japan Railway Co). Brokerages declined, however, led by Nomura Holdings Inc, Japan’s largest securities company (which fell 1.1 percent).
Meanwhile, the Indonesian rupiah exchange rate depreciated against the US dollar as market participants responded negatively toward US President Barack Obama's statement that Russia faces more sanctions if the crisis in Crimea (Ukraine) intensifies (these sanctions are particularly aimed at Russia's energy sector). This concern fuels investors' appetite for safe havens such as the US dollar.