Thursday, October 10, 2013
Indonesia Stocks Set To Seesaw Despite Good Signs
JAKARTA (Nikkei)--Indonesia's Jakarta Composite Index has been seesawing since mid-September, benefitting little from the prevailing view that U.S. will keep its quantitative monetary easing policy for the time being.
The Indonesian central bank's repeated raising of its policy rate and general inflationary pressure have also kept investors worried about corporate earnings.
Shares in the automaker PT Astra International Tbk. are more than 20% lower than their record-high of 8,300 rupiah logged in March.
Real estate-related stocks have also been trading lower. PT Ciputra Development Tbk. remains at the 900 rupiah level, more than 40% below its level seen at the end of May. PT Intiland Development Tbk. has dropped by about 50% in the same period.
Macroeconomic gauges, however, are starting to show favorable signs. The inflation rate in September was 8.4%, marking its first decline in four months. In August, Indonesia's trade balance turned to the black for the first time in five months. In July, the country logged its worst-ever trade deficit.
On Tuesday, the Indonesian central bank's board of governors meeting decided to keep the bank's policy rate of 7.25% unchanged. This is the first time in five months that it has not raised the rate. Market reaction to this has so far been favorable. On the same day, shares in PT Bank Mandiri Tbk. rose 3.6%.
But for the time being, Indonesian stock prices are expected to continue seesawing despite potential influences from U.S. monetary policy.
(The Nikkei, Oct. 10 evening edition)