The benchmark stock index of Indonesia - Jakarta Composite Index (IHSG) - fell sharply on Monday (27/04) amid mixed regional stock markets. Three main factors caused the weak performance of Indonesian stocks. Firstly, several key companies posted weak first quarter corporate earnings. Secondly, Indonesia’s economic growth in the first quarter may fall below 5 percent (y/y), which would be a six-year low. Lastly, Indonesia is getting bad press around the globe due to imminent executions of convicted foreign drug traffickers.

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Indonesian stocks fell sharply after the market opened on Monday (27/04). Indonesia’s benchmark Jakarta Composite Index had dropped 2.61 percent to 5,293.73 points by 12:00 local Jakarta time. This poor performance is most likely due to market participants wait & see attitude before the release of Indonesia’s Q1-2015 GDP growth figure (to be released at the start of May) and the release of Indonesian companies’ Q1-2015 financial earnings reports. Moreover, Indonesia will soon execute several foreign convicted drug traffickers.

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Both Indonesian stocks and the rupiah are weakening on Monday’s trading day (13/04). During the first trading session at the Indonesia Stock Exchange (IDX), the benchmark Jakarta Composite Index declined 0.65 percent to 5,455.45 points. Meanwhile, the rupiah had depreciated 0.35 percent to IDR 12,973 per US dollar based on the Bloomberg Dollar Index at 1:05 pm local Jakarta time on Monday (13/04). What are the primary factors that influenced these weak performances?

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Minutes of the Federal Reserve’s latest FOMC meeting (17-18 March), released Wednesday (08/04), show that the US central bank is divided about the timing of higher US interest rates. Several policymakers would approve such an interest rate hike in June 2015, while others would prefer to see rates increase later this year or even next year as they consider that the US economy is still not strong enough yet. However, when reading the minutes there are some signs suggesting that the institution is on course to raise its key rate this year.

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Indonesian stocks and the rupiah are performing well on Monday’s trading day (06/04) after weak US economic data suggests that the US central bank (Federal Reserve) will still refrain from raising its key interest rate too soon. Weaker-than-expected US jobs data caused that most Southeast Asian stock markets strengthened today. Moreover, the rupiah also felt the positive impact. According to the Bloomberg Dollar Index, the rupiah had appreciated 0.54 percent to IDR 12,950 per US dollar by 15:17 pm local Jakarta time.

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Indonesian stocks continued to climb strongly after the market opened on Tuesday (31/03). The country’s benchmark Jakarta Composite Index (IHSG) surged nearly one percent. Several external and internal factors are at play here. Firstly, the US Federal Reserve indicated over the past week that it may not raise its key interest rate too soon, leading to investors’ appetite for emerging market assets. Secondly, Chinese policymakers provided room for increased infrastructure spending and monetary stimulus.

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Whereas the Indonesian rupiah is depreciating on Monday’s trading day (30/03), Indonesian stocks climb significantly. At 14:15 pm local Jakarta time, the benchmark stock index (Jakarta Composite Index) had gained 0.93 percent to 5,444.27 points. In line with other Asian markets, Indonesia’s stock index felt the positive impact of Fed Chief Janet Yellen’s statements on Friday (27/03). Yellen indicated in a speech in San Francisco that it is riskier to raise US interest rates too fast than to raise them too slowly.

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Indonesian stocks and the rupiah exchange rate strengthened rapidly on Thursday (19/03) after the Federal Reserve refrained from raising its key interest rate at the two-day FOMC meeting that ended on Wednesday (18/03) as US inflation is still tame while US economic growth somewhat moderated. The US central bank signaled that it is not in a hurry to raise interest rates, but, on the other hand, it also dropped the word ‘patient’ from its guidance on interest rates (which have been at historic lows since late 2008).

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Indonesian stocks and the rupiah exchange rate are feeling the negative impact of the bullish US dollar on Monday (09/03) after stronger-than-expected US payrolls fuel expectation that the US Federal Reserve may start to raise its key interest rate in June. Moreover, last week Fed Chair Janet Yellen had already signalled to Congress that the US central bank may lessen its ‘patient stance’ on a looming interest rate hike. The benchmark Jakarta Composite Index fell 1.25 percent to 5,445.84 points on Monday’s first trading session (09/03).

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Indonesian authorities continue their efforts to ease people’s concerns about the impact of a weak rupiah on the Indonesian economy. In fact, authorities emphasize that a weak rupiah will improve the country’s trade and current account balance as Indonesian exports become more competitive. Over the past week the rupiah depreciated about 1 percent against the US dollar. Since the start of 2015, Indonesia’s rupiah has tumbled 4.4 percent against the greenback, hence being one of the worst performing emerging Asian currencies this year

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Most stock markets and currencies in Southeast Asia weakened on Friday (29/05), including Indonesia’s benchmark Jakarta Composite Index and the rupiah. The Jakarta Composite Index fell 0.40 percent to 5,216.38 points, while the rupiah depreciated 0.01 percent to IDR 13,224 per US dollar according to the Bloomberg Dollar Index. Over the past week, Indonesian stocks and the rupiah weakened primarily due to the Greek debt crisis, looming higher US interest rates and the lack of positive domestic factors.

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In line with other Asian indices, Indonesian stocks rose on Tuesday (26/05). The benchmark Jakarta Composite Index rose 0.62 percent to 5,320.90 points. Positive sentiments did not originate from the USA as US stock markets were closed for a holiday yesterday but primarily stemmed from China where the economic planning agency announced to implement several new policies in a bid to boost the sluggish economy. The rupiah, however, depreciated 0.25 percent to IDR 13,220 per US dollar based on the Bloomberg Dollar Index.

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Although most emerging market stocks fell, Indonesian stocks and the rupiah showed a solid performance on Thursday (21/05). The rupiah appreciated 0.40 percent to IDR 13,122 per US dollar according to the Bloomberg Dollar Index, while the benchmark stock index of Indonesia (Jakarta Composite Index) rose 0.39 percent to 5,313.21 points. Most emerging stocks fell due to weak data from China (despite a series of stimulus). However, Indonesian stocks were supported by news about its credit rating and dividend announcements.

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For a good portion of this year, the stock market in Indonesia has been met with selling pressure. There is a reasonable basis for this, as we have seen some disappointments in corporate earnings that have led some of the biggest names in the country to trade lower. But there are external events at work, as well. And some of these factors might not be readily apparent to many regional investors. One of these is the sovereign debt situation in the Eurozone.

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Stock markets in Indonesia have been particularly volatile in recent weeks, and this has left many investors wondering about whether or not the rally that started last October is still viable and ready to continue. Last month, the MSCI Indonesia Index (which trades under the stock symbol EIDO) took a large drop - from well above the 6,500 mark to below 6,000. From a percentage perspective, a move like this can generate significant losses for those that bought into Indonesian stocks while they were still at elevated levels.

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Ahead of the release of Indonesia’s official first quarter GDP growth figure (scheduled to be released in the first week of May), Indonesian stocks fell and the rupiah depreciated (slightly) against the US dollar on the back of weak market sentiments that have plagued Indonesian markets over the past week. Most importantly, weaker-than-expected Q1-2015 corporate earnings reports of listed Indonesian blue chips have made market participants concerned that Indonesia’s economic slowdown has continued into the first quarter of 2015.

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After being in negative territory for quite a while, the benchmark stock index of Indonesia (Jakarta Composite Index) finished 0.13 percent higher at the end of the trading day. In line with the major stock indices in the Asia-Pacific region, Indonesia’s main index climbed although gains were limited as investors are concerned about failed discussions between the Greek government and its creditors in the Eurozone. However, positive sentiments were still felt due to capital injections in Indonesian state-owned companies.

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The Indonesian rupiah exchange rate appreciated and Indonesian stocks rose on Wednesday (04/02) on the back of rallying oil prices, a successful bond auction, easing tensions in Europe, and weak US factory orders. Based on the Bloomberg Dollar Index, Indonesia’s rupiah appreciated 0.21 percent to IDR 12,630 per US dollar on Wednesday (04/03). Meanwhile, the benchmark stock index of Indonesia (Jakarta Composite Index, abbreviated IHSG) climbed 0.45 percent to 5,315.28 points.

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Both Indonesia’s rupiah exchange rate and stocks strengthened on Tuesday (27/01) as concerns about Greece exiting the Eurozone somewhat eased while the positive market sentiments that were caused by the European Central Bank’s recently unfolded quantitative easing program are still felt. Indonesia’s benchmark stock index (Jakarta Composite Index) gained 0.33 percent to 5,277.15 points, while the rupiah appreciated 0.31 percent to IDR 12,469 per US dollar based on the Bloomberg Dollar Index.

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Indonesian stocks hit a record high on Thursday (22/01). Most emerging Asian stocks and currencies strengthened on increased speculation that the European Central Bank (ECB) is to launch a massive bond-buying program (which was confirmed later on the day after Asian markets had closed), a move aimed at boosting inflation in the Eurozone and which puts pressure on euro-denominated assets. The euro had depreciated 1.67 percent against the US dollar by 11:20 ET on Thursday based on Bloomberg data.

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