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.
So far this year Indonesia's Jakarta Composite Index rose 11.29 percent and considering the Federal Reserve recently raised its Fed Funds Rate by 25 basis points, while announcing that more interest rates hikes (perhaps three) are planned for 2017, investors seem to engage in profit-taking, while anticipating capital outflows triggered by monetary tightening in the world's largest economy next year.
Overnight, US stocks touched new record levels. Particularly banks and companies focused on travel pushed the key US indices higher on Tuesday (20/12). The Dow Jones Industrial Average rose 0.4 percent to 19,974.62, the Standard & Poor's 500 index advanced 0.4 percent to 2,270.76, while the Nasdaq composite picked up 0.5 percent to 5,483.94 points. However, the advance of US stocks - as well as the higher crude oil price - failed to support Indonesian stocks on Wednesday.
Perhaps tomorrow Indonesian stocks can get some support from Fitch Ratings' decision to revise Indonesia's credit rating outlook from stable to positive.
Bank Indonesia's Jakarta Interbank Spot Dollar Rate (JISDOR) depreciated 0.60 percent to IDR 13,473 per US dollar on Wednesday (21/12).
Indonesian Rupiah vs US Dollar (JISDOR):| Source: Bank Indonesia