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21 April 2025 (closed)
Jakarta Composite Index (6,445.97) +7.70 +0.12%
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Most Asian stock markets are strengthening on Friday after indices on Wall Street rose yesterday on strong US economic growth. The US economy grew 3.7 percent (y/y) in the second quarter of 2015 (much higher than the 2.3 percent estimated previously). As a result, the Dow Jones Industrial Average surged 2.27 percent while global oil prices rebounded over 10 percent on Thursday (27/08).
Darmin Nasution, Indonesian Coordinating Minister for Economics, told reporters on Thursday (27/08) that the government is set to announce a policy package aimed at supporting the rupiah. The package, set to become effective next week, involves deregulation and tax holidays. Further information is expected to be presented by Indonesian Finance Minister Bambang Brodjonegoro later today.
In line with major stock indices in Asia, Indonesia’s benchmark Jakarta Composite Index rebounded directly after the opening of trade on Thursday (27/08). The index surged 2.51 percent to 4,344.11 points. Most indices in Asia were up after the US Dow Jones Industrial Average climbed nearly 4 percent on Wednesday (26/08), effectively ending a six-day losing streak, on heightened expectation that the Federal Reserve will not raise its key Fed Fund Rate yet in September. However, markets are still plagued by severe volatility.
There are few signs that Indonesian stocks and the rupiah will rebound on Tuesday (25/08). Benchmark stock indices of China and Japan continued to fall directly after opening on Tuesday and are therefore expected to drag down other markets in Asia. Yesterday, major markets in the USA and Europe slumped, while commodity prices hit new lows (oil slid below USD $40 per barrel for the first time since 2009). The rupiah continued to weaken after opening on Tuesday to IDR 14,065 per US dollar by 09:06 am local Jakarta time.
For the first time since July 1998, when Indonesia was still plagued by the Asian Financial Crisis, the rupiah has fallen beyond the IDR 14,000 per US dollar mark. Many analysts had already predicted over the past couple of months that Indonesia’s currency would weaken beyond this ‘psychological’ level as external pressures are simply too high. Since 2013 the rupiah has weakening (against the US dollar) as the US Federal Reserve started preparing for monetary tightening. The recent devaluation of China’s yuan added more pressure.
The global selloff hit Asian markets on Monday (24/08). Stock indices and currencies in the Asian region collapsed dramatically on Monday morning. Indonesia’s benchmark Jakarta Composite Index (IHSG) was down 4.66 percent to 4,133.33 points by 10:50 am local Jakarta time, while the rupiah had weakened beyond IDR 14,000 per US dollar according to the Bloomberg Dollar Index. China’s benchmark Shanghai Composite Index plunged over 8 percent. What is happening to the emerging market assets in Asia today?
Last week, Indonesia’s central bank (Bank Indonesia) refrained from adjusting its relatively high interest rate regime as it is committed to support the ailing rupiah and combat high inflation. Another decision that was revealed by Bank Indonesia is the soon-to-be-introduced regulation that limits total (non-collateral) monthly US dollar purchases to USD $25,000 (down from USD $100,000 previously). This regulation will be implemented in a move to thwart speculators that want to take advantage of the weak and volatile rupiah.
The Indonesian rupiah continues to flirt with a 17-year low as the currency is getting closer and closer to the IDR 14,000 per US dollar level. Meanwhile, Indonesian stocks took another blow as the country’s benchmark stock index (Jakarta Composite Index) fell 2.39 percent on Friday (21/08). Such turmoil is not only confined to Indonesia but was felt across Asia and the West. Markets were plagued by selloffs in energy shares (due to falling oil prices) and uncertainty about the timing of higher US interest rates.
Contrary to the expectation of most analysts, the US Federal Reserve will possibly refrain from raising its key interest rate in September. On Wednesday evening (19/08) the minutes of the Fed's latest FOMC meeting (held in July) were released and they showed that most officials agreed that the US economy is heading for an interest rate hike but is not quite there yet as inflation remains lower than targeted while the current sluggish global economy poses risks and triggers high volatility.
Indonesian stocks and the rupiah continued to weaken on Wednesday (19/08) in line with most other Asian stocks and currencies. Investors are cautious ahead of the release of the minutes of the Federal Reserve’s latest FOMC meeting, hence moving into safe haven assets. The minutes are to be released early Thursday morning local Indonesian time. Investors will be searching for signs informing about a possible Fed Fund Rate hike in September. If there are such signs, emerging market assets will be under heavy pressure tomorrow.
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After a strong performance yesterday, the Jakarta Composite Index (IHSG) fell 0.10 percent to 4,517.62 points on Tuesday (17/09). Part of the investor community grabbed their chance to engage in profit taking after yesterday's gain but most investors are careful and reluctant to make any major decision prior to the result of the Federal Reserve's FOMC meeting (17-18 September). It is expected that after this meeting there will be more clarity about the future of the Fed's quantitative easing program.
Rising indices on Wall Street at the end of last week were a major factor behind rising stock indices in Asia, including Indonesia's benchmark stock index (IHSG), on Monday (16/09). For market players this development was a sign to enter the market. Moreover, expectation has emerged that the Federal Reserve will not take any drastic decisions in the FOMC meeting (on 17-18 September) regarding its quantitative easing program. This expectation has calmed down markets. Indonesia's IHSG rose 3.35 percent to 4,522.54 points.
Last week, Indonesia's benchmark stock index (IHSG) climbed 7.3 percent to end at 4,375.53 on Friday (13/09). This growth is remarkable as it remains unknown what the Federal Reserve will do with its quantitative easing program (QE3). The next Fed meeting - scheduled for 17-18 September - is expected to provide more clarity regarding this matter. Positive sentiments that lifted the IHSG were Indonesia's slightly increased foreign exchange reserves, its stable rupiah after another BI rate hike, and the Bilateral Swap Deals (BSA) with Japan and China.
Despite concerns that Indonesia's benchmark stock index (IHSG) would weaken on Thursday's trading day (12/09), the index ended 0.17 percent up to 4,356.61 points. Indices on Wall Street and in Asia impacted positively on the IHSG and kept foreign investors increasing their stock portfolios in Indonesia. Moreover, the Bank Indonesia's decision to raise the country's benchmark interest rate (BI rate) by 25 basis points to 7.25 percent was generally well-received by investors. Banking stocks helped to support the IHSG.
It was decided at the Board of Governors’ meeting (RDG) of Bank Indonesia on 12 September 2013 to raise the BI Rate by 25 bps to 7.25%, the rate on the Lending Facility by 25 bps to 7.25% and the rate on the Deposit Facility by 25 bps to 5.50%. This action forms part of the follow-up measures taken to reinforce the policy mix instituted by Bank Indonesia, which focuses on controlling inflation, stabilizing the rupiah exchange rate and ensuring the current account deficit is managed to a sustainable level.
According to data from the Indonesian Cement Association (ASI), domestic cement sales have fallen 5.8 percent to 3.3 million tons in August 2013 (from the same month last year). Being an important indicator of economic expansion (as cement sales inform about the development of property and infrastructure projects in the country), these lower cement sales confirm the slowing pace of economic growth in Indonesia. Compared to July 2013, cement sales in Indonesia fell by a massive 32 percent.
Without any real negative global reasons, Indonesia's benchmark stock index (IHSG) was down 0.20 percent to 4,349.42 points. Apparently, market participants were looking for profit taking after the index rose sharply in the last couple of days. There may also have been the psychological influence of the gaps at 4,191-4,225 and 4,072-4,102 that still need to be closed. Will the IHSG close these? Compared to the general upward trend of Asian indices, it seems strange if the IHSG would deviate from this trend only to close the gaps.
Good economic data from China and Japan made many Asian stock indices go into green territory, including Indonesia's benchmark stock index (IHSG) which gained 3.98 percent to close at 4,358.14 points on Tuesday (10/09) despite the lack of positive internal factors in Indonesia. Promising European openings also provided support for the index. Foreign investors, similarly to yesterday, were net purchasers of Indonesian assets, while domestic investors mostly sold their assets.
The release of positive economic data in China at the end of last week were continued into this week and had a good impact on regional stock indices. Most Asian stock indices continued their upward movement. This time, Indonesia's benchmark stock index (IHSG) was able to join its regional peers. Although Indonesia's investment climate is still not conducive, foreign investors were back buying more Indonesian stocks than they sold. The index rose 2.92 percent to 4,191.26 points on Monday (09/09).
In recent years, Indonesia's car sales have shown robust growth, culminating in a record high number of 1.12 million sold car units in 2012. This is an important statistic because car sales inform us about the state of the economy. Generally, rising car sales indicate an expanding economy while declining car sales indicate that the economy is slowing down. When we take a look at the table below, there is a link visible between Indonesia's GDP growth and rising car sales, except for 2011 to 2012 when GDP growth declined while car sales rose.
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