Global markets are again facing rough times after China’s manufacturing activity fell to a three-year low in July 2015, yet another sign that the world’s second-largest economy is slowing faster than earlier estimated (and this surely impacts negatively on the global economy). Concerns about China led to plunging stock indices from Japan to New York on Tuesday (01/09). Moreover, International Monetary Fund (IMF) Managing Director Christine Lagarde, who is on a visit in Indonesia, said the IMF may soon cut its forecast for global economic growth in 2015 again (from 3.3 percent currently).

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In line with nearly all other Asian stock markets, Indonesia’s benchmark Jakarta Composite Index (IHSG) plunged 2.15 percent to 4,412.46 points on Tuesday (01/09). After Asian trade had closed European and US indices also plummeted severely. The main reason is today’s announcement that China’s manufacturing fell to a three-year low in August 2015, yet another sign that China’s economic growth is declining faster than estimated. The country’s manufacturing PMI dropped to 49.7 in August from 50.0 in July (a reading below 50.0 indicates contraction).

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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).

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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.

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The Indonesia Stock Exchange (IDX) announced today (25/08) that it has curtailed the daily limit on share price losses to ten percent. This means that shares of listed Indonesian companies on the IDX can fall up to a maximum of 10 percent per day (from the range of 20 to 35 percent previously). This revised regulation aims to cushion the negative effects of current high (global) market volatility. Yesterday (‘Black Monday’), the Jakarta Composite Index fell to a 20-month low. The cap on upper price movements remains 20-35 percent per day.

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Most analysts expected that Indonesia’s benchmark stock index (Jakarta Composite Index) would be plagued by another selloff on Tuesday (25/08) as the major stock indices in the USA and Europe plunged yesterday, while commodity prices hit new lows (crude oil fell below USD $40 per barrel for the first time since 2009). Moreover, Shanghai and Japan opened in the red. However, reality proves differently. Around 11:25 am local Jakarta time the Jakarta Composite Index was up 1.77 percent to 4,237.28 points.

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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.

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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?

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On 23 August 2015, 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 in the last seven days. Most of the topics involve economic subjects such as Indonesian stocks and the rupiah, the July trade balance, Bank Indonesia’s interest rates, the 2016 State Budget draft, geothermal power development, land rights available to foreign investors, and more.

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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.

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The benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) fell 0.14 percent to 5,198.90 points on the last trading day of the week, the first day of decline in five trading days, as investors engaged in profit taking after Indonesia’s Constitutional Court confirmed the official election result of the General Elections Commission (KPU) that announced Joko Widodo as winner of the July 2014 presidential election. Next week investors may continue profit taking as the index is still overbought.

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Indonesia’s benchmark stock index (known as the Jakarta Composite Index or IHSG) climbed 0.31 percent to 5,206.14 points on Thursday's trading (21/08) on speculation that Indonesia’s Constitutional Court will reject defeated presidential candidate Prabowo Subianto’s claim that the official July 2014 presidential result is illegal due to massive violations. Although the Court is still reading out the verdict, it has already indicated that evidence for violations is incomplete and unconvincing. Therefore, a Court decision that calls for revoting has become unlikely.

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The benchmark stock index of Indonesia (Jakarta Composite Index or IHSG) climbed slightly on Monday (18/08), not being impacted - as we feared earlier - by mixed stock indices on Wall Street and Europe on Friday (15/08). Increased speculation about widening Chinese monetary policy in the country’s property sector made a good impact on Asian stock indices, including Indonesia’s IHSG. At the end of the trading day, the IHSG had strengthened 0.15 percent to 5,156.75 points, also supported by the appreciating rupiah (Bank Indonesia’s mid-rate).

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Weakening global stock indices meant that it would be difficult for the benchmark stock index of Indonesia (Jakarta Composite Index or IHSG) to continue its upward movement on Tuesday (05/08). Moreover, there were few positive sentiments originating from the Archipelago as Indonesia’s Q2-2014 GDP growth (+5.12 percent year-on-year) was below expectation and the country’s trade balance showed a deficit of USD $300 million in June 2014. Meanwhile, the Indonesian rupiah exchange appreciated slightly.

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Indonesian stocks and the rupiah exchange rate showed great volatility on Tuesday’s trading day (22/07). In the first part of the day the benchmark stock index of Indonesia (known as Jakarta Composite Index of IHSG) and rupiah strengthened on speculation that market favourite Joko “Jokowi” Widodo would win the presidential election without riots or other incidents that could trigger political uncertainties. On Tuesday evening, the General Elections Commission (KPU) indeed officially declared Jokowi the winner of the election.

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One day ahead of the official result of the Indonesian presidential election, the benchmark stock index of Indonesia (known as Jakarta Composite Index or IHSG) showed a good performance as market participants seem to speculate not only on a Joko Widodo win, but also on a peaceful and orderly course of events (no large scale demonstrations or riots). On Sunday, president Yudhoyono received both presidential candidates at the State Palace for dinner. This may have helped to cool some of the tension between supporters of both sides.

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Despite China’s positive economic growth of 7.5 percent in the second quarter of 2014, most Asian stock indices were down. Only Hong Kong's Hang Seng Index (HSI) managed to show a slight gain as large cap stocks were sought after. The HSI impacted positively on the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) on Wednesday (16/07) which climbed 0.85 percent to 5,113.93 points on Wednesday (16/07). Foreign investors recorded net buying.

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Most Asian stock indices were up on Tuesday (15/07) influenced by rising indices on Wall Street and in Europe on the previous day. Also for investors on Indonesia’s benchmark stock index (Jakarta Composite Index) this meant an opportunity to engage in stock trading even though the Indonesian rupiah exchange rate depreciated considerably and political uncertainties remain (as the winner of the Indonesian presidential election remains a question mark). In fact, investors were confused to see the Merah Putih coalition.

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Although the benchmark stock index (known as Jakarta Composite Index or IHSG) started the day in the green zone, it ended down due to profit taking as market participants prefer to wait for the official result of the Indonesian presidential election first. Both presidential candidates (Joko Widodo and Prabowo Subianto) declared a victory based on different unofficial quick count results. This has resulted in political uncertainty in Southeast Asia’s largest economy and thus investors refrain from buying Indonesian assets.

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The Indonesian rupiah exchange rate depreciated 0.67 percent to IDR 11,665 per US dollar on Monday (14/07) according to the Bloomberg Dollar Index. Meanwhile, the benchmark stock exchange of Indonesia (Jakarta Composite Index) declined 0.23 percent to 5,021.06 points. The main reason for weakening markets in Indonesia is investors’ wait & see attitude ahead of the official result of Indonesia’s presidential election. On 22 July 2014, the General Elections Commission (KPU) will announce the winner of the election.

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