Hormuz Tensions and MSCI Rebalancing Send JCI Tumbling

The Jakarta Composite Index fell more than 1%, slumping to the 6,200 level at the opening of the second trading session on Tuesday (11/08), while the rupiah weakened 0.48% to Rp 17,835 per US dollar. Pressure on Indonesia’s financial markets was driven by global sentiment related to fading hopes for peace in the Strait of Hormuz, which pushed world oil prices higher and increased risk aversion. Domestically, market participants are also positioning themselves ahead of the MSCI rebalancing. On a more positive note, the announcement of Destry Damayanti as the sole candidate for Bank Indonesia Governor was well received by market players, with the rupiah having the potential to strengthen towards the Rp 17,600 to Rp 17,400 per US dollar range.