Indonesia Stocks Close Lower as Middle East Risks Offset FX Reserves
Indonesia Stocks Close Lower as Middle East Risks Offset FX Reserves
Jakarta. Indonesian stocks fell 16.8 points, or 0.25%, to 6,619 at Monday’s close as renewed Middle East tensions and stronger-than-expected US jobs data prompted investors to turn cautious, offsetting positive domestic sentiment from Indonesia’s foreign exchange reserves.
A total of 300 stocks advanced, while 348 declined and 315 were unchanged. Trading value reached Rp 13.6 trillion ($771.04 million).
Pilarmas Investindo Sekuritas said investors were closely watching developments in the Middle East after the United States and Iran exchanged attacks involving vessels over the weekend.
Iran reportedly targeted oil tankers and several vessels linked to the US, while also planning to establish a restricted maritime zone outside the Strait of Hormuz in the coming days.
The tensions followed a US attack on an Iranian oil tanker, which Washington described as retaliation for Tehran’s missile strikes on US Navy warships.
“The escalation of the conflict has again raised concerns about inflation, particularly through potential disruptions to global oil supplies and trade routes. This has made market participants more cautious,” Pilarmas said in a research note Monday.
The market also reacted to stronger-than-expected US employment data, Pilarmas said. The US Change in Nonfarm Payrolls rose to 162,000 from 21,000 previously.
The stronger labor market points to a recovery after a period of weakness. However, it has also fueled speculation that the Federal Reserve has room to maintain its tight monetary policy, including the possibility of changing its benchmark interest rate this month.
Domestically, strong foreign exchange reserves provided positive sentiment. Bank Indonesia recorded reserves of $146.5 billion at the end of August, up from $145.3 billion at the end of July.
The reserves were equivalent to around 5.4 months of imports, or 5.3 months of imports and government external debt payments, well above the international adequacy standard of around three months of imports.
“Such a position is considered capable of supporting external sector resilience while maintaining Indonesia’s macroeconomic and financial system stability,” Pilarmas said.
However, investors also remained alert to risks from natural disasters, including the eruption of Mount Anak Krakatau over the weekend.
Pilarmas said the eruption could raise the risk of disruptions to public health, transportation and logistics activity.
Regional markets were mixed on Monday. Japan’s Nikkei rose 2.1%, while South Korea’s Kospi jumped 4.6%. Hong Kong’s Hang Seng fell 0.9%, while the Shanghai Composite gained less than 0.1%.
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