High July Trade Deficit Causes Indonesia's Stock Index to Fall 2.23%
Indonesia's benchmark stock index (IHSG) went down 2.23 percent on Monday (02/09) after Statistics Indonesia (BPS) released a number of macroeconomic data. The country's inflation pace increased to 8.79 percent year-on-year, while it posted a record monthly trade deficit in July 2013 (USD $2.31 billion). Investors have been highly concerned about the development of Indonesia's current account deficit and after it became known that the figure was high in July, the IHSG quickly lost value.
The IHSG lost 2.23 percent and finished on the level of 4,101.23 points at the end of Monday's trading day.
Inflation in August continued on a high pace due to volatile food prices, gold and imported inflation as the rupiah has weakened significantly. However, the result is lower than many analysts previously assumed. A Bank Indonesia survey, which was released in the second week of August, indicated that inflation had already reached 1.3 percent. As such, the official inflation rate of Indonesia in August of 1.12 percent (month on month) was well-received. Annual inflation currently stand at 8.79 percent.
Imports in July amounted to USD $17.42 billion (and consisted mainly of oil, petroleum and gas), while exports amounted to USD $15.11 billion. This widening trade deficit triggered another plunge in the rupiah. According to Bloomberg data, the rupiah fell 0.2 percent to IDR 10,940 per US dollar in the spot market. The central bank's mid rate fell 0.48 percent to IDR 10,922 per US dollar.
| Source: Bank IndonesiaIndofood Sukses Makmur, Indonesia's largest food processing company and the world's biggest producer of instant noodles, fell 7.7 percent today after it offered to buy the remaining shares of China Minzhong Food Corporation Ltd (CMFC) for USD $1.12 a share. Earlier this year, Indofood had expanded its ownership in the Chinese vegetable processor to 29.33 percent. However, a recent report by the Glaucus Research Group indicated that Minzhong’s accounts were not in order.
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