IHSG Weakens, Rupiah Declines

IMPERIUMDAILY.COM – JAKARTA – After opening last week, the Composite Stock Price Index (CSPI) on the Indonesia Stock Exchange (IDX) was observed to weaken 29.97 points or 0.47 percent to 6,293.5 on Monday (06/01).

The group of 45 leading stocks or the LQ45 index moved down 8.56 points or 0.84 percent to 1,012.93.

“Last week and this week the market was affected by the optimism of the signing of phase one between China and the US,” said Director of PT. Anugerah Mega Investama Hans Kwee in Jakarta.

Meanwhile, US President Donald Trump said a phase one trade agreement between the US and China would be signed on 15 January 2020 at the White House.

The agreement will be to encourage the progress of Chinese factory production and manufacturing activities in China for two consecutive months.
Market participants are also still focused on Brexit issues. European Commission President Ursula von der Leyen said the European Union might need to extend the deadline for talks on new trade relations with Britain.

In the last British general election, market participants had been waiting for Britain’s ability to reach new trade agreements with the European Union in a relatively short period, so that it remained a concern for some investors.

Domestically, the inflation rate that came out in early 2020, which showed inflation in December 2019, was only 0.34 percent, far below market expectations of 0.42 percent. Besides, annual inflation (yoy) was only 2.72 percent below the 2017 inflation of 3.61 percent and 2018 of 3.13 percent.

Asian regional stock markets this afternoon include the Nikkei index down 496.69 points or 2.1 percent to 23,159.93, the Hang Seng index down 254.76 points or 0.9 percent to 28,196.74, and the Straits Times index down 18, 98 points or 0.59 percent to 3,219.84 positions.

As the IHSG weakened, the rupiah exchange rate that was traded between banks in Jakarta also moved to weaken 18 points or 0.13 percent to Rp13,948 per US dollar compared to the previous position of Rp13,930 per US dollar.

“In Monday’s trade, the rupiah will be weakened,” said PT Garuda Futures Director Ibrahim Assuaibi in Jakarta on Monday.

Market participants are expected to pay attention to the ongoing Middle East polemic. Rising oil prices this weekend due to US airstrikes reportedly killed Iranian Major General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis.

Middle East tensions are also feared that it could disrupt oil supplies and have driven oil prices up.

Meanwhile, China’s central bank is reported to be easing its monetary policy, and is predicted to be a positive sentiment on the financial markets.

To support the economic slowdown in China, the People Bank of China (PBoC) cut the amount of cash that must be stored in banking reserves, releasing funds of around 800 billion yuan (115 billion US dollars).

PBoC is also known to use loan interest rates as a new benchmark to determine floating interest rates. This is believed to reduce borrowing costs, which in turn can drive growth. (Lna / ant)

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