Indonesian Stocks and Rupiah Exchange Rate Down on Oil Concerns
The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) declined 0.34 percent to 4,847.70 points on Friday (20/06). Trade was thin on this week’s last trading day with only about 3.4 billion shares - valued at IDR 3.8 trillion (USD $319 million) - being traded on the Indonesia Stock Exchange (well below the average daily value of IDR 6.1 trillion). Foreign investors accounted for 48 percent of total trading, recording net buying worth of IDR 31.3 billion (USD $2.6 million).
Indonesian cement companies were among the decliners on Friday, resulting in the 0.74 percent drop of the basic manufacturing sector. Shares of Indocement Tunggal Prakarsa, Indonesia's second largest cement producer, fell 3.7 percent, while Holcim Indonesia, the country’s third largest cement producer, declined 1.2 percent.
The mining sector, however, was the worst performing sector on Friday losing 1.44 percent, led by Adaro Energy (-3.7 percent) and Vale Indonesia (-2.2 percent).
Indonesia’s agribusiness sector declined 0.59 percent, led by the 16.6 percentage point fall of palm oil producer Dharma Satya Nusantara.
During the week, the Jakarta Composite Index fell 0.7 percent. This performance is in line with the performance of other emerging stock markets due to concern about higher global oil prices (triggered by violence in Iraq). The higher oil price will disturb trade and fiscal balance sheets of oil-importing countries (including Indonesia). On Friday (20/06), Brent crude reached a nine-month high at USD $115.71 per barrel.
The Indonesian rupiah exchange rate declined 1.58 percent during the past week, mainly on oil price concerns amid geopolitical tensions in Iraq. Being a net oil importer, Indonesia’s trade balance and budget deficit is highly influenced by the international oil price. For a more detailed analysis of the rupiah’s recent performance click here.
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