Indonesia Stock Market & Rupiah: Asian Stocks Rally as Brexit Odds Slide
In line with other Asian assets, Indonesian stocks and the rupiah strengthened on Monday (20/06) as falling odds of a "Brexit" boosts risk appetite. Voters in the United Kingdom will decide in a referendum on Thursday (23/06) whether or not to remain part of the European Union (EU). An exit of the UK from the EU (the so-called "Brexit") is expected to cause a major global shock and flight to safety. The latest opinion polls, however, indicate a growing chance that the UK will remain part of the UK, hence causing a sigh of relief on global markets. Meanwhile, oil prices were up on the weakening US dollar.
Ahead of Thursday's referendum trillions of US dollars had been wiped off global stock markets in volatile trading, while government bond yields touched historic lows as global investors had been concerned about the possibility of a "Brexit". Today, however, there were different sentiments on markets.
Bettfair betting odds on Monday (20/06) showed that there is a 72 percent probability of the UK to remain part of the EU, up from the range of 60 - 67 percent that was reported at the end of last week. Rising expectation of the UK remaining part of the EU gave rise to risk sentiment. As a result of improving risk appetite gold, government bonds and the yen (all being safe haven assets) retreated on Monday's trading day, while riskier assets (such as emerging market stocks an currencies) were purchased. On the other hand, rapidly strengthening emerging market stocks and currencies increase chances of profit taking.
Today, Japan's Nikkei 225 index surged 2.34 percent on the weaker yen, while benchmark stock indices in Singapore and Vietnam were also up more than one percent. Indonesia's benchmark Jakarta Composite Index climbed 0.59 percent on Monday (20/06), while the Indonesian rupiah appreciated 0.65 percent to IDR 13,252 against the US dollar (Bloomberg Dollar Index).
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