Indonesia's main stock index (IHSG) returned to where it belonged: above the level of 5,000 points. Apparently Moody's threat to downgrade Indonesia's credit rating, as has been done by Standard & Poor's a few days ago, did not leave a big impression on market participants. As a result, the IHSG rose 1.02 percent to 5,042.79 and thus almost repaired the damage done at the end of last week. Other Asian stock indices as well as positive openings in Europe also provided good support today.
Foreign investor were more concerned about the credit rating issue as foreigners mostly sold their Indonesian assets, while domestic investors, on the other hand, recorded net purchases.
Contrary to the IHSG, the IDR rupiah weakened slightly as investors were concerned about Moody's statement that it may lower its outlook for Indonesia if the country keeps postponing to raise the price of subsidized fuel. But for the meanwhile, Moody's will maintain Indonesia's Baa3 investment grade rating. On the other hand, the rupiah's slight fall was limited because the US dollar weakened as there was a lack of sentiment on the US Forex market.| Source: Bank Indonesia
Asian stock indices were generally positive as they responded to Australia's lower interest rate. Positive sentiments also came from China where Prime Minister Li Keqiang is planning to reduce restrictions to the free flow of capital investments in and out China. There are also good expectations about the corporate performances of a number of companies, including Toyota Motor Corp, SJM Holdings, and Gome Electric Appliances Holding Ltd.