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Indonesian stocks and the rupiah had a bad start on Monday morning. By 09.35 am local Jakarta time, Indonesia’s benchmark Jakarta Composite Index had fallen 0.99 percent to 4,371.49 points, while the rupiah had depreciated by 0.45 percent to IDR 14,236 per US dollar (Bloomberg Dollar Index).
Indonesian stocks and the rupiah are slightly down on Friday afternoon (04/09). Similar to yesterday it is a relatively quiet trading today (possibly caused by closed markets in Shanghai hence curtailing the spread of severe volatility). By 15:20 pm local Jakarta time the benchmark Jakarta Composite Index was down 0.48 percent to 4,411.99 points while the Indonesian rupiah had depreciated 0.07 percent to IDR 14,180 per US dollar (based on the Bloomberg Dollar Index).
Indonesia has cancelled further development of the multi-billion high-speed railway between the capital city of Jakarta and Bandung (West Java) as President Joko Widodo decided that Indonesia does not need a train that can reach speeds of over 300 km per hour on the relatively short route (150 km) between both cities. Besides the short distance, there will also be around 14 stations constructed between both terminal stations, implying that the train needs to hit the brakes before it can reach its maximum speed.
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).
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).
According to the latest rumours, the government of Indonesia tends to favour China to build the nation's first high-speed railway that will connect the capital city of Jakarta and Bandung in West Java. Over the past weeks, the ‘battle’ between China and Japan over who will be awarded the contract to construct the high-speed and high-profile railway between both cities (worth approx. USD $5 billion) heightened.
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).
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.
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.
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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Supported by enthousiastic foreign investors, the benchmark stock index of Indonesia (Jakarta Composite Index or also known as IHSG) managed to climb 0.61 percent to 4,942.16 points on Tuesday (03/06). Particularly consumer, trade and mining stocks were popular on today's trading day. It is interesting to note that this growth happened amid sharp rupiah depreciation as the currency still feels the negative impact of the USD $1.97 billion April 2014 trade deficit that was released yesterday (02/06).
Although initially the benchmark stock index of Indonesia (known as Jakarta Composite index or IHSG) fell after the market responded to today's release of Indonesia's April trade deficit and May inflation, the index ended in the green zone due to foreign net buying and general positive Asian indices (influenced by higher stock indices on Wall Street at the end of last week). Particularly Indonesia's big cap stocks in the miscellaneous industry and consumer sectors were popular as these were relatively cheap after having tumbled at the end of last week.
Investors' appetite for mining and plantation stocks managed to support the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) on Thursday's trading day (22/05). After the recent decline of the IHSG, market participants continued to accumulate stocks that are considered cheap. Furthermore, indices on Wall Street on Wednesday were up and impacted positively on Asian indices on Thursday, thereby providing positive market sentiments for the IHSG.
Although most Asian emerging currencies strengthened on Thursday (22/05) against the US dollar due to the preliminary HSBC Flash China Manufacturing Purchasing Managers' Index (PMI) recovering to 49.7 in May 2014 (from 48.1 one month earlier) and the Federal Reserve Minutes indicating that there will be no US interest rate hike soon, the Indonesian rupiah exchange rate continued to decline. Based on the Bloomberg Dollar Index, the currency had depreciated 0.19 percent to IDR 11,531 per US dollar by 5pm local Jakarta time.
Although initially the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) declined shortly after the opening on Wednesday (21/05), during the remainder of the day it went up. This is a trend which we often detect: after a sharp fall we see a rebound on the following day as investors want to take advantage of 'cheap' stocks. However, the rebound was only limited as investors prefer to wait and see for further market sentiments first. The main positive factor today were rising Asian stock indices.
While most emerging Asian currencies fell, the Indonesian rupiah exchange rate appreciated 0.08 percent to IDR 11,523 per US dollar based on the Bloomberg Dollar Index on Monday (12/05). The depreciating Chinese yuan, after its central bank set the midrate at its lowest level in eight months, put pressure on other Asian currencies. Today, Indonesia's Finance Ministry sold IDR 10 trillion rupiah (USD $867 million) of bonds, higher than the indicative target of IDR 8 trillion rupiah. Meanwhile, Indonesia’s two-year bonds gained.
Contrary to most Asian stock indices, the benchmark stock index of Indonesia (known as IHSG or the Jakarta Composite Index) declined on Thursday (08/05). Positive sentiments that were provided by the BI rate (Indonesia's benchmark interest rate) that was kept at 7.50% in today's Bank Indonesia Board of Governors' Meeting, and China's higher-than-expected trade balance in April 2014 (USD $18.5 billion), were offset by the depreciating rupiah exchange rate and foreign net selling of Indonesian stocks. The IHSG fell 0.02 percent to 4,860.89 points.
The central bank of Indonesia (Bank Indonesia) decided at today’s Bank Indonesia Board of Governors’ Meeting, convened on 8 May 2014, to maintain the country's benchmark interest rate (BI rate) at 7.50 percent, with the Lending Facility rate and Deposit Facility rate held at 7.50 percent and 5.75 percent respectively. This policy is consistent with efforts to steer the rate of inflation towards its target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level.
After Statistics Indonesia (BPS) had announced on Monday (05/05) that Indonesia's gross domestic product (GDP) grew by 5.21 percent year-on-year (yoy) in the first quarter of 2014 (considerably below analysts' projections of around 5.6 percent), concerns have risen about the country's economic expansion for the remainder of the year. The government of Indonesia targets a GDP growth rate of between 5.8 and 6.0 percent (yoy). However, several international institutions do not agree with this optimistic target.
The benchmark Indonesia stock index (IHSG or Jakarta Composite Index) moved sideways on Monday's trading day (05/05) influenced by Indonesia's disappointing GDP growth result in the first quarter of 2014 in combination with mixed Asian stock indices. At the start of the day, the index was up as investors believed that the Q1-2014 GDP growth result would be in line with expectations. However, after Statistics Indonesia announced the growth rate, the IHSG fell, although stayed in the green zone.
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