In the post-Brexit reality, stocks have been performing well, worldwide, with the exception of the week of 4 July when markets were hit by profit-taking amid heightened concern about the world's economic fundamentals. Apart from that week (when Indonesian markets were closed for a public holiday) stocks have been rallying, fueled by optimism about monetary stimulus from key central banks. So far this week, gains in worldwide stocks reappeared, fed by a positive (but not too positive) US jobs report and the prospect of more stimulus from central banks.
10 May 2022 (closed)
Jakarta Composite Index (6,819.79) -89.96 -1.30%
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
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Today's Headlines Abenomics
Asian markets performed well today on an upbeat US jobs report. Indonesia's benchmark Jakarta Composite Index hit a 13-month high at 5,069.02 points after strengthening 1.97 percent on Monday (11/07), led by financials and consumer staples. In June the US economy added 287,000 jobs, beating forecasts and signalling that the US economy remains reasonably healthy. However, another Fed Funds Rate hike is still believed to be off the table and therefore investors started the week with strong appetite for riskier assets.
After Indonesia's markets have been closed for one full week due to the Idul Fitri holiday, they are back open today (11/07). Because of last week's holiday, Indonesia's stock market has not experienced the sell-off that occurred in other markets in the week of 4 - 8 July. This sell-off followed a relief-rally in global markets after the Brexit vote decision: although shortly after Brexit, global shares gained on central bank's stimulus hopes, the sell-off emerged one week later as investors started to be concerned about the impact of Brexit and the economic fundamentals of Europe.
On Monday morning (08/12), the Indonesian rupiah exchange rate quickly plunged after the release of weak macroeconomic data from Japan and China, two important trading partners of Indonesia. Economic growth in Japan, the world’s third-largest economy, contracted 0.5 percent (quarter-to-quarter) in Q3-2014, while Chinese imports fell 6.7 percent (year-on-year) in November 2014. As a result the Indonesian rupiah had depreciated 0.54 percent to IDR 12,365 per US dollar by 11:30 am local Jakarta time, the weakest level in six years.
The International Monetary Fund (IMF) assesses that the Asian region is still the world's most dynamic region in terms of economic growth. The IMF expects that Asia's economic growth will accelerate to 5.4 percent in 2014 despite the ongoing US Federal Reserve tapering of asset purchases. However, the IMF continued to stress the need for further structural reforms in Asia in an attempt to avert the negative impact of US tapering and future interest rate hikes. In 2013, the Asian region grew 5.2 percent.
Latest Columns Abenomics
After the currency of Japan (yen) had weakened to its lowest level in seven years against the US dollar on Tuesday (11/11), the currency rebounded today (12/11) as speculation spread that Japan’s Prime Minister Shinzo Abe is not considering to dissolve parliament and to postpone a planned sales-tax increase. Japan’s currency had gained 0.4 percent to 115.31 per US dollar at 9:02 am London time according to Bloomberg data (yesterday it had touched a seven-year low at 116.10 per US dollar).
In recent years, the Japanese economy has experienced significant hardships, generated largely by the aftermath of the hurricane and tsunami that hit the country in 2011. But newly adapted stimulus programs (the much-discussed programs of Abenomics) have boosted economic growth rates since that period. As a result, annual GDP is expected to rise to 1.8% for 2014, and these improvements are expected to have a supportive on the performances seen in surrounding economies in the Asia-Pacific region.
Anoop Singh, Director of the Asia and Pacific Department within the International Monetary Fund (IMF), conducted a media roundtable in Tokyo today (30/10) in which he outlined the IMF's view on the economy of Asia. Asia will remain the global growth leader, although the IMF has lowered growth forecasts. Both tighter global liquidity and homegrown structural impediments will weigh on growth, but for most economies a gradual pickup in exports to advanced economies and resilient domestic demand should help support growth.
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