When on Friday afternoon (30 December 2016) the Indonesia Stock Exchange (IDX) closed its doors it effectively brought the year 2016 to an end in terms of stock trading on the local bourse. On Friday Indonesia's benchmark Jakarta Composite Index fell 0.11 percent to 5,296.71 points after two days of impressive gains. However, when looking at full-year 2016 the Jakarta Composite Index climbed 15.32 percent, hence being the second-best performing (national) benchmark stock index (after Thailand) in the Southeast Asian region in 2016.

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As we approach the year-end, and without the presence of positive triggers, investors seem to engage in profit-taking. Therefore, Indonesia's benchmark Jakarta Composite Index now extended its losing streak to seven straight sessions. Indonesian stocks fell 0.99 percent to 5,111.39 points on Wednesday (21/12), a decline led by consumer staples and financial shares, while the Indonesian rupiah depreciated 0.16 percent to IDR 13,459 per US dollar (Bloomberg Dollar Index). The Federal Reserve's recent rate hike still seems to overshadow global investor sentiment.

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On 18 December 2016, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve political, social and economy-related topics such as the impact of the Fed Funds Rate hike, the November trade balance, Bank Indonesia's interest rate environment, tax amnesty program, infrastructure development, Ahok's blasphemy trial, and more.

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The Federal Reserve decided - in line with expectations - to raise its benchmark Fed Funds Rate by 0.25 percent to the range of 0.50 - 0.75 percent, exactly one year after its first rate hike (in a decade). Furthermore, the Fed Chair Janet Yellen also indicated it sees three more interest rate hikes in 2017. This is a bit more hawkish than markets expected. Tighter monetary policy in the USA is required as the US labor market and growth in household spending improves. Inflation has also improved but remains below the Fed's 2 percent (y/y) target. Business investment, however, remains soft.

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Indonesian stocks and the rupiah are under pressure on Thursday (24/11). Amid rising expectation of a Fed Funds Rate hike before the year-end, the US dollar rose to a 13 year-high implying all emerging market currencies are sliding. The Indonesian rupiah, one of the more vulnerable emerging market currencies, had depreciated 0.39 percent to IDR 13,542 per US dollar by 10:20 am local Jakarta time. Meanwhile, the benchmark Jakarta Composite Index had fallen 0.85 percent to 5,167.87 points by the same time.

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Ethnic and religious tensions have flared up in Indonesia ahead of the Jakarta gubernatorial election in February 2017. Meanwhile, global financial markets, particularly emerging market assets, have been plagued by heavy volatility ever since Donald Trump became US president-elect. It all leads to a situation in which investors prefer to seek safer haven assets, reflected by major pressures on Indonesian stocks and the Indonesian rupiah exchange rate (versus the US dollar).

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Asian stocks are under heavy pressure on Wednesday (02/11) as the latest polls in the USA are suggesting that the US presidential race between market favorite Hillary Clinton and controversial candidate Donald Trump is closer than initially expected. Narrowing polls cause concern about future US economic policy after the election on 8 November 2016. Earlier, Trump expressed criticism on the Federal Reserve, claiming that the US central bank is engaged in politics by maintaining the loose monetary policy.

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Indonesia is expected to end the prolonged economic slowdown, finally, in 2016. Between 2011 and 2015 the nation's gross domestic product (GDP) continued to slide amid sluggish global growth, tumbling commodity prices and domestic changes (higher interest rate environment in 2013-2015 to combat sharply rising inflation as a result of subsidized fuel price reforms). In 2016 this prolonged slowdown will most likely end. Based on the latest forecasts, the Indonesian economy should expand by around 5.0 percent (y/y) this year, up from a growth pace of 4.7 percent in 2015.

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When the United Kingdom (UK) decided to leave the European Union (the so-called Brexit) through a referendum that was held on 23 June 2016, global markets were in shock. While these markets and the UK economy have recovered from the shock (although the pound remains near a 30-year low and Britain lost its AAA rating implying that the cost of government borrowing becomes higher) there are still some concerns about the (negative) impact of Brexit on emerging market economies in Asia, including Indonesia.

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Indonesian assets are leading declines in Asia on Wednesday's trading day (05/10) as (global) markets are digesting the latest reports that the European Central Bank (ECB) may withdraw its bond buying program, while statements from US Federal Reserve officials strengthened the case for a Fed Funds Rate hike before the year-end. Lastly, the International Monetary Fund (IMF) cut its forecast for US economic growth in 2016 to 1.6 percent (y/y) from its earlier estimate of 2.2 percent (y/y).

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Amid falling Asian stock indices, Indonesia's benchmark stock index (the IHSG or Jakarta Composite Index) managed to gain 33.8 points to 4,546.50 (+0.75 percent) on Wednesday (23/10). The main reason for today's upward movement was large-scale stock purchases by domestic investors, who are more confident now after it has been expected that the Federal Reserve will not tone down its massive bond-buying program (quantitative easing) in the near future. A few blue chips, including Bank Mandiri and Unilever, were popular stocks today.

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Rising global stock indices at the end of last week continued to impact positively on Asian stock indices on Monday (21/10), including Indonesia's Jakarta Composite Index (IHSG). Moreover, speculation that the Federal Reserve will not alter its quantitative easing program until early next year also brought along positive market sentiments. This is expected to result in the inflow of US dollars into emerging markets. On Monday, the IHSG rose 0.70 percent to 4,578.18 despite continued foreign selling and rupiah depreciation.

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The Jakarta Composite Index (IHSG) rebounded on Thursday's trading day (17/10), supported by good news from the United States where finally an agreement was reached regarding the US debt ceiling. This agreement brought positive market sentiments on Asian stock markets, including the IHSG which rose 0.59% to 4,518.93 points. Moreover, Indonesia's minister of Economy Hatta Rajasa stated that Indonesia had not been significantly impacted by the US shutdown issue and this statement also managed to ease investors' concerns.

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Although Indonesia's benchmark stock index (IHSG) started mixed on Wednesday (09/10), it gradually climbed as the trading day moved on. The country's benchmark interest rate (BI rate), which was kept at 7.25 percent by Bank Indonesia on Tuesday (08/10), continued to make a positive impact. However, negative market sentiments were brought on by the US shutdown as well as the downgrade of the IMF's outlook for world economic growth in 2013 and 2014. Lastly, the weakening IDR rupiah also implied negative market sentiments.

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As had been hoped, after closing the gap at 4.375-4.403, Indonesia's benchmark stock index (IHSG) did not continue its fall at the same pace as it had in the past couple of days. Investors were still cautious, however, and took a wait and see attitude. Foreign investors were net sellers of Indonesian stocks, while the rupiah exchange rate kept depreciating. Moreover, Asian stock indices were mixed and thus provided no good support for the IHSG. The index fell 0.02 percent to 4,405.89. Domestic investors were net buyers of Indonesian stocks.

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Both the Indonesian currency and the benchmark stock index (IHSG) continued their fall on Tuesday (24/09). Wall Street's weak performance on the last three trading days was a major factor that brought negative market sentiments to the Indonesia Stock Exchange (IDX). Even good openings in Europe were not able to push the IHSG back into green territory. The index fell 2.25 percent to 4,460.41 points. Foreign investors were net sellers of Indonesian stocks, while domestic investors were net buyers.

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Indonesia's benchmark stock index (IHSG) extended its downward movement on Monday (23/09) as investors continued to look for profits after the index had risen sharply following the announcement that the US quantitative easing program will not be ended yet. Pressures on the IHSG were intensified by the depreciating rupiah and the weakening of Hong Kong's Hang Seng Index (which was partly brought on by a typhoon). Despite foreign investors being net buyers of Indonesian stocks, the IHSG fell 0.46 percent to 4,562.86 points.

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Starting from May 2013, Indonesia's benchmark stock index (IHSG) has been on a weakening (bearish) trend inflicted by various reasons. First, in early May, Standard & Poor's downgraded Indonesia's credit rating due to the government's hesitancy to slash fuel subsidies. Then, the Federal Reserve started to speculate about ending its quantitative easing program. Capital outflows that followed indicated the vulnerable state of the Indonesian economy. Moreover, the controversial hike in fuel prices in late-June resulted in high inflation.

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On Thursday (19/09), most currencies and stock indices outside the USA were bullish after the Federal Reserve decided to continue its massive monthly USD $85 billion bond buying program. Today (20/09), Asian currencies and stock indices took the foot off the gas as many investors sought to cash in on yesterday's gains. The MSCI Asia Pacific was still able to rise slightly (0.1 percent) after jumping 2.2 percent yesterday, but Indonesia's benchmark stock index (IHSG) plunged 1.86 percent (after gaining 4.65 percent yesterday).

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Contrary to the expectation of most analysts, the Federal Reserve decided to continue its monthly USD $85 billion bond-buying program, known as quantitative easing, and retained the low interest rate of 0.25 percent. Although coming as a surprise, the news was well-received by the investor community all around the world, who were eager and confident to purchase stocks. The benchmark stock index of Indonesia, IHSG, felt this impact too and rose 4.65 percent to 4,670.73 points.

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