Energy stocks are having a tough day so far on Wednesday as the tumbling oil price makes investors eager to sell energy stocks. Crude oil is now back in the low USD $40s a barrel level (where it was in mid-November 2016) and this triggers concerns about the oil industry, about the shale industry, as well as about banks. Many regard cheap oil toxic for the global economic recovery. Low energy costs encourages bond prices and flattens yield curves as investors expect inflation will have difficulty to rise.

Crude oil prices fell 2 percent on Tuesday (20/06) as market participants are not convinced that efforts of OPEC and non-OPEC producers to cut global oil output are enough to offset structurally weak global oil demand, especially now news surfaced that informs oil production has risen in key producers such as Libya and Nigeria. Since its recent peak, US crude has now fallen 20 percent (hence entering bearish territory).

Meanwhile, US index provider MSCI decided to add 222 mainland Chinese A-shares to the widely tracked MSCI Emerging Markets Index, one of its key benchmarks. This decision could - on the long term - attract more than USD $400 billion worth of global funds into China's mainland equity markets. However, this decision is yet to boost China's shares significantly. So far on Wednesday the performance of Chinese shares is rather bleak due to the tumbling oil prices. Moreover, China's 222 A-shares will be officially added to the MSCI index in June 2018.

Update [09:40 am 21/06]: after a bleak start on Wednesday morning, Chinese shares have been rising later in the day, becoming the only bright spot in Asian stocks markets.

The inclusion of China's mainland shares into the MSCI could impact negatively on shares of nations in Southeast Asia as investors may want to re-balance their stock portfolios (meaning Southeast Asian stocks could be sold in order to purchase Chinese stocks).

Overnight, stocks on Wall Street fell due to concerns about the oil price. The S&P 500 declined 0.67 percent, the Dow Jones industrial average declined 0.29 percent, while the Nasdaq composite fell 0.82 percent on Tuesday (20/06).

We expect Indonesia's benchmark Jakarta Composite Index to join most other Asian indexes in the red zone today as there are seemingly no factors that can push Indonesian stocks into green territory. Yesterday, Indonesian stocks surged 0.87 percent to a near record high. This performance was attributed to window dressing ahead of the long holiday. From Friday 23 June 2017 up to Friday 30 June 2017 markets in Indonesia will be closed for the Idul Fitri celebrations (the festivities that mark the end of the holy Ramadan month).

Indonesia's central bank (Bank Indonesia) will not conduct any monetary or banking activities between 26 - 29 June.