Although most Asian stocks were in red territory this week, Indonesian stocks tumbled the deepest as stronger US dollar and rising US Treasury yields prompted foreign investors to reduce portfolio holdings in emerging markets. JCI decline has gone below 6,000. This makes market players become less confident and triggered to cut loss their investment. Since January, the IDX has recorded a USD2.1 billion in capital outflows. Foreign investors have been dumping their Indonesian assets.
Governor of BI said that the key rates may be lifted if the pressure could potentially disrupts financial-system stability. The country's benchmark rate is now at 4.25 percent. However, foreign investors seems not interested enough. Higher rate could cause pressure for stocks because listed companies' future outlook becomes less bright.
Today, Indonesian cigarette maker HM Sampoerna reported it saw its net income fall by 7.9 percent y/y. IDR has sunken by 4.2 percent against USD over the past three months, making it the worst performing currency in Asia after rupee. Indonesia’s worst equity rout since 2013 has got strategists asking if the stocks are cheap enough to buy. Although the recent slump may be a chance to buy “high-quality” stocks, Nomura is staying tactically underweight. Before one can be confident that the stock market’s selloff will subside, there has to be stability in the rupiah, Chetan Seth argues.
Sources :
The Inside Stories
Indonesia Investments
Bloomberg
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