Indonesia Stock Index (IHSG) Continues Rebound with 1.92% Rise
For the second day in a row Indonesia's benchmark stock index (IHSG) was able to post a gain. Today, it rose 1.92 percent to 4,103.59 points. This rebound is possibly the result of the higher key interest rate. Yesterday, it was announced that the central bank (Bank Indonesia) scheduled an extra meeting to discuss monetary policy. Immediately speculation emerged that the BI rate might be raised by 50 basis points. And indeed it was raised, much to the liking of many investors and analysts.
Bank Indonesia raised its benchmark interest rate (BI rate) to 7.0 percent in order to support the depreciating rupiah, while trying to curb the country's current high inflation. However, the positive response on the stock market may be short lived as on Monday (02/09) the August inflation rate will be released. Initially, the government expected that August inflation would be kept below the one percent mark. However, by the second week of August a Bank Indonesia survey indicated that inflation already stood at 1.3 percent (month-on-month). As such, it is more likely that the rate will accelerate to between 1.5 and 2.0 percent. Yesterday, Finance minister Chatib Basri said that inflation at the year-end will probably come close to 9.3 percent (year-on-year). For market players this is a reason to remain concerned.
Most Asian stock indices were up on Thursday (29/08) as investors have become a bit less concerned about the political tensions related to Syria. Japan's Nikkei index rose 0.8 percent to 13,440.39, South Korea's Kospi gained 1.5 percent to 1,912.27, Hong Kong's Hang Seng rose 0.4 percent to 21,608.57, and Australia's S&P/ASX 200 gained 0.1 percent to 5,092.50.
| Source: Bank Indonesia–
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