Indonesian Stocks & Rupiah Down on Global Economy and MPR Voting

On Tuesday (07/10), the Dow Jones industrial average lost 1.6 percent to 16,719.39, the Standard & Poor's 500 index dropped 1.5 percent to 1,935.10, and the Nasdaq composite fell 1.6 percent to 4,385.20 points.

Internally, the market is concerned about political developments in Indonesia as the power of Prabowo Subianto, the defeated presidential candidate in the 2014 presidential election, is rising in the Indonesian House of Representatives (DPR) and People’s Consultative Assembly (or MPR), most likely at the expense of president-elect Joko Widodo’s reform programs. Subianto now controls majorities in the DPR and MPR.

Based on the Bloomberg Dollar Index, Indonesia’s currency had depreciated 0.45 percent to IDR 12,257 per US dollar by 11:15 am local Jakarta time zone.

Meanwhile, the Jakarta Composite Index (Indonesia’s benchmark stock index) had recovered slightly by the same time. Shortly after opening on Wednesday the index declined over 1.0 percent but by 11:15 am Jakarta time it was down 0.61 percent to 5002.05 points.