Indonesia's benchmark stock index (IHSG) continued its upward movement on Wednesday (29/01) when it gained 1.74 percent to finish at 4,417.35. The IHSG was supported by positive American and European stock indices on the previous day and by strengthening emerging market currencies that felt the impact of higher interest rates in India and Turkey. In Indonesia, consumer, infrastructure and plantation stocks were popular as the current high rainfall is regarded as bringing a positive impact on these sectors.
Other factors that supported the IHSG's performance were the appreciating rupiah exchange rate and the positive assessment of Morgan Stanley that raised its recommendation from underweight to equalweight due to an improvement in Indonesia’s trade balance as well as cheaper valuations.
The aggressive interest rate hike in Turkey (its overnight lending rate was raised from 7.75 percent to 12 percent) impacted positively on Asian stock indices. The appreciating Turkish lira in combination with the falling yen and improved macroeconomic data in South Korea as well as positive financial results of several Asian companies (such as Shizuki Electric Co and Atlas Iron Ltd) brought a fresh wind across Asian markets on Wednesday (29/01).