The Jakarta Composite index (Indonesia's benchmark stock index or IHSG) fell on Monday (11/11) amid mixed Asian markets. Not even positive finishes on Wall Street last Friday (08/11) were able to support the IHSG. Most investors seem to be waiting for results of Bank Indonesia's Board of Governor's Meeting which is scheduled for Tuesday (12/11). This meeting will provide answers about the central bank's view of the domestic economy and whether it thinks another adjustement of the BI rate is necessary.
Ahead of the meeting, shares in Indonesia's banking sector fell and subsequently dragged down other sectors, including the basic industry and consumer goods sectors. Today, foreign investors recorded a net sell, while domestic investors bought more shares than they sold. The index fell 0.78 percent to 4,441.72 points.
| Source: Bank Indonesia
Investors' wait and see attitude regarding the BI rate (Indonesia's benchmark interest rate) also impacted on the currency. The Indonesian rupiah fell 0.72 percent against the US dollar on Monday (11/11). Moreover, the US dollar rose due to higher nonfarm payrolls, even though the US unemployment rate had increased slightly and consumer spending declined. Market participants are also waiting for the speeches of the Federal Reserve heads of Atlanta and Minneapolis, both of which are expected to outline their views on the US economy. It has been speculated that both support the tapering after various recent US economic data is well-received.
Asian stock indices were mixed on Monday but with a rising trend. In China the market is optimistic that the communist party meeting will result into a pro-economic growth policy. Also the higher industrial production of China resulted in positive market sentiments. Japan's Nikkei gained as the yen fell against the US dollar.