JAKARTA (TheInsiderStories) – Indonesian stock markets plunged on Thursday (26/04) as a stronger dollar and rising U.S treasury yields prompted foreign investors to reduce portfolio holdings in emerging markets.
The Jakarta Composite Index (JCI), declined 2.80 percent to close at 5,909.108 on Thursday (26/04). Today’s decline was the fifth straight session of losses, bringing the year-to-date losses to 7 percent.
About 9.47 billion shares worth Rp10.14 trillion (US$734.78 million) changed hands today. Losers beat gainers 345 by 47 companies. Foreign investors, which contributed to 39 percent to today’s trading, sold Rp1.3 trillion more in shares than they bought.
An index that tracks mining-related stocks declined 3.46 percent, leading sectoral decline, followed by an index that tracks finance stocks (down 3.18 percent).
The JCI’s today decline has gone below 6,000, the level that was believed as the resistance level. When the index decline has gone beyond resistance level, market players typically become less confident and may be triggered to cut loss their investment.
Since January to April 25, the Indonesia Stock Exchange recorded a Rp29.25 trillion (US$2.1 billion) in capital outflows. Foreign investors have been dumping their Indonesian portfolio assets following more hints that the Federal Reserve would increase its interest rates by more than three times this year.
The FFR hike policy is aimed at calling back investors who have been focusing on emerging markets, including Indonesia.
Indonesia’s stock decline was the worst in Asia, and most Southeast Asian stock markets declined sharply today, as a strong US dollar and surging U.S treasury yields, which went up more than 3 per cent, prompted capital outflows in emerging markets.
Vietnam stocks was down 3.3 percent to their lowest close in more than two months, stock markets in Bangkok declined 0.36 percent, while the Philippine shares reversed earlier losses in the session to close 0.8 percent higher.
The rupiah, however, was traded at 13,885 per dollar on Thursday, gaining by 0.24 per cent from previous day. The rupiah depreciated nearly 5 percent against the dollar since late January as a broad rally in the greenback triggered capital outflows
Finance Minister Sri Mulyani Indrawati said the government and financial authorities will carefully observe movements in global market, and monitor the impacts of the policy movement in the U.S that may affect its currency.
Meanwhile, in the press conference today, Governor of Bank Indonesia Agus Martowardojo says the central bank is open to lift the key rates if the pressure on the rupiah continues and potentially disrupts financial-system stability.
In this month, BI decided keep its benchmark interest rate in 4.25 percent, leaving it unchanged since September last year. The deposit facility and lending facility rates are also seen unchanged, at 3.50 percent and 5.00 percent, respectively.
The officials have repeatedly said room for further easing of monetary policy is limited, but this has been helped in part by a lack of inflationary pressures.
Martowardojo assured that the central bank would always monitor the market closely and would conduct market intervention to stabilize rupiah.