JAKARTA (TheInsiderStories) – Asian stock markets extended losses today dragged of a trade war rebounded and weakening of oil prices. In the local market Indonesian government announced toll tariff hike in Jakarta Outer Ring Roads (JORR) starting June, 20.
This morning, Japan’s Nikkei 225 index lost 0.49 percent, the Kospi index fell 0.22 percent while the Australian stock index, S&P/ASX 200 moving up 0.45 percent. MSCI Asia Pacific Index excluding Japan, was down 0.10 percent.
The correction in Asian bourses followed Wall Street which also closed lower, overnight. Dow Jones and S & P 500 declined after President Donald Trump threatened to impose greater tariffs on Chinese goods.
On Monday (18/06), U.S’s President Donald Trump announced a preliminary list of essential and strategic items that will be charged 25 percent effective starting July 6. Responding Trump’s policy, China issued its own list of U.S imports subject to tariffs, targeting soybeans, airplanes, cars, and chemicals. This trade tension triggered anxiety in the financial markets.
From the currency market, the Australian dollar weakens due to renewed concerns about trade protectionism. Meanwhile, world oil prices are rising as production output signals considered by OPEC and Non OPEC member will be smaller than the original plan.
The price of West Texas Intermediate (WTI) crude for July delivery in Nymex closed up 1.21 percent to US$65.85 a barrel. In the mean time, Brent crude for August settlement on ICE Futures Europe ended up to $75.34 a barrel.
However, in the Asian market WTI prices dropped to $65.79 per barrel following the information OPEC members are considering to increase its production up to 600,000 barrels per day over the next few months. The oil producers group will meet formally in Vienna this week to discuss the sustainability of the production cuts deal.
Earlier this month, oil prices in the U.S have fallen 1.8 percent amid OPEC’s potential to cut output quotas that have been in production since 2017. However, Iran, Venezuela and Iraq have rejected the idea.
For the domestic market, the country’s Toll Road Management Agency
has announced that it would charge higher tariffs JORR toll gates starting on Wednesday at 12 a.m. This new policy we believed will drive toll road operator shares in the domestic market.
But in general, the onslaught of this toll road development has not made a toll operator shares prospective. In our view, this more profitable for construction companies working on toll road projects such as PT Wijaya Karya Tbk (IDX: WIKA), PT Adhi Karya Tbk (IDX: ADHI), and PT PP Tbk (IDX: PTPP).
Odd-even rule in the Jakarta – Cikampek toll road section which effective since March 12 also has the potential to suppress the performance of toll issuers. If this rule shows good results in suppressing congestion, it is possible that this rule will be applied in other toll roads that have high density.
Therefore, for the long term, this regulation will not only depress the performance of PT Jasa Marga Tbk (IDX: JSMR) as the Jakarta – Cikampek toll operator, but also other toll companies such as PT Waskita Karya Tbk (IDX: WSKT), PT Citra Marga Nusaphala Persada Tbk (IDX: CMNP), and PT Nusantara Infrastructure Tbk (IDX: META).
Currently the local stock market still on holiday and will open again on Thursday (21/06).