Investors Dump Indonesian Stocks as Export Controls Shock Market<\/p>\n
Jakarta. Jakarta Composite Index (JCI) fell deeper into correction\nterritory on Friday morning as investors reacted to mounting concerns\nover the government\u2019s new export control policies, prolonged Middle East\ntensions, and renewed pressure on state-owned banks following Fitch\nRatings\u2019 warning on sovereign support risks.<\/p>\n
JCI dropped 27 points, or 0.44%, to 6,065 in early trading after\nmoving between 5,966 and 6,074.<\/p>\n
RTI data showed trading volume reached 3.7 billion shares with\nturnover of Rp 1.7 trillion ($96 million) across more than 189,000\ntransactions. Losers heavily outnumbered gainers, with 437 stocks\ndeclining, 123 advancing, and 148 unchanged.<\/p>\n
Phintraco Sekuritas said external sentiment remained weak due to the\nprolonged conflict in the Middle East and concerns over a potential\nclosure of the Strait of Hormuz, which could keep crude oil prices\nelevated longer than expected.<\/p>\n
At the same time, the brokerage said several newly introduced\ngovernment policies were viewed negatively by investors as they could\nhurt the investment climate in the short term.<\/p>\n
\u201cOn the other hand, these new policies are likely intended to boost\nstate revenue in order to help cover the fiscal deficit,\u201d Phintraco\nSekuritas said in its research note.<\/p>\n
The brokerage added that the upcoming FTSE and MSCI rebalancing could\ncontinue to weigh on the Indonesian market.<\/p>\n
Banking stocks were also expected to remain under pressure after\nFitch Ratings said the long-term ratings of state-owned Himbara banks\nwere heavily dependent on government support.<\/p>\n
Fitch said that the banks\u2019 ratings remain aligned with Indonesia\u2019s\nsovereign rating of BBB\/Negative, reflecting the possibility that the\ngovernment\u2019s capacity to support the banking sector could weaken if\nfiscal pressures intensify.<\/p>\n
Meanwhile, S&P Global Ratings warned that Indonesia\u2019s plan to\ncentralize commodity export management could potentially hurt exports,\nweigh on state revenue, and affect the country\u2019s balance of\npayments.<\/p>\n
\u201cAs a result, we continue to monitor state-owned mining stocks and\nremain cautious about further downside risks for non-state-owned mining\nshares,\u201d Phintraco Sekuritas said.<\/p>\n
Separately, Kiwoom Sekuritas Indonesia said the government, Bank\nIndonesia, and the Financial Services Authority (OJK) were strengthening\nthe implementation of the natural resource export proceeds (DHE SDA)\npolicy to increase foreign exchange reserves, deepen the domestic forex\nmarket, and maintain rupiah stability.<\/p>\n
Bank Indonesia has expanded DHE SDA placement instruments to include\nChinese yuan in addition to US dollars, in line with growing\nIndonesia-China local currency settlement transactions, which have\nexceeded $25 billion annually.<\/p>\n
The central bank also extended the DHE SDA placement tenor to as long\nas 12 months. Funds can now be parked in term deposits, BI foreign\nexchange securities, BI foreign exchange sukuk, as well as foreign\ncurrency-denominated government bonds and sharia securities.<\/p>\n
Global sentiment was mixed overnight. Wall Street closed slightly\nhigher on Thursday, with the S&P 500 rising 0.2% and edging closer\nto its record high. The Dow Jones Industrial Average gained 276 points,\nor 0.6%, while the Nasdaq Composite added 0.1%.<\/p>\n
As of 8:59 a.m. Jakarta time, Japan\u2019s Nikkei 225 jumped 2.04%, South\nKorea\u2019s Kospi rose 0.43%, Hong Kong\u2019s Hang Seng gained 0.57%, and\nChina\u2019s Shanghai Composite edged up 0.06%.<\/p>\n
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