Contrary to the positive performance of most emerging market stocks, Indonesia's benchmark Jakarta Composite Index fell more than one percent on Monday (15/08). While other markets were supported by advances in crude oil prices and a rally in Chinese shares, Indonesian shares declined on the nation's weak trade data that were released by Indonesia's Statistics Agency today. Investors were eager to use this opportunity to engage in profit taking as the Jakarta Composite Index nearly touched a record-high level after an impressive recent rally.

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Indonesian assets made a remarkable performance on Monday (01/08). Indonesia's benchmark Jakarta Composite Index surged 2.79 percent to 5,361.58 points, while the rupiah appreciated 0.50 percent to IDR 13,047 per US dollar. Indonesian stocks - by far - outperformed their counterparts in other Asian Pacific nations. Overall, the majority of Asian stocks rose today on the back of waning expectations of another US interest rate hike in the near future.

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After being in green territory for almost the entire trading day, Indonesia's benchmark Jakarta Composite Index suddenly plunged into deep red in the last 1.5 hours of trading on Friday (29/07). HM Sampoerna, one of the largest companies on the Indonesia Stock Exchange in terms of market capitalization, shocked analysts by plunging 9.70 percent. Another huge company, Unilever Indonesia also put severe pressure on the Jakarta Composite Index by plunging 5.75 percent on Friday.

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Indonesian stocks and the rupiah performed well on the day that President Joko Widodo announced his cabinet reshuffle, while Japan announced a larger-than-expected economic stimulus package to boost the local economy. The benchmark stock index of Indonesia (Jakarta Composite Index) surged 0.96 percent to 5,274.36 points, while the Indonesian rupiah appreciated 0.29 percent to IDR 13,137 per US dollar (Bloomberg Dollar Index) on Wednesday (27/07). Lets take a closer look.

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Positive sentiments caused by the Group of 20 economies meeting in China have waned, hence most Asian stocks are lower on Tuesday (26/07). Instead, negative sentiments are caused by falling shares on Wall Street overnight as well as the declining crude oil price (touching a near three-month low). Market participants are also in 'wait and see-mode' ahead of the Federal Reserve's July two-day policy meeting (that starts later today) and the two-day policy meeting of the Bank of Japan that starts on Thursday.

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It was another impressive day at the office for the Indonesia Stock Exchange. Indonesia's benchmark Jakarta Composite Index (IHSG) surged 1.35 percent to 5,242.82 points on Wednesday (21/07). After Thailand's benchmark index, the Jakarta Composite Index was the best performing index in Asia today. Overall, Asian markets were mixed as most investors seem to reassess the global economy after the International Monetary Fund (IMF) decided to cut its global growth outlook (modestly) on Tuesday (19/07).

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The central bank of Indonesia (Bank Indonesia) announced today (14/07) that the nation's foreign exchange reserves rose by USD $6.2 billion to USD $109.8 billion in June 2016. The rise was supported by foreign exchange receipts, primarily from the issuance of government US dollar-denominated bonds, the auction of Bank Indonesia foreign exchange bills, tax revenues, oil & gas export earnings, as well as the withdrawal of foreign-denominated government loans.

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In the post-Brexit reality, stocks have been performing well, worldwide, with the exception of the week of 4 July when markets were hit by profit-taking amid heightened concern about the world's economic fundamentals. Apart from that week (when Indonesian markets were closed for a public holiday) stocks have been rallying, fueled by optimism about monetary stimulus from key central banks. So far this week, gains in worldwide stocks reappeared, fed by a positive (but not too positive) US jobs report and the prospect of more stimulus from central banks.

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The Indonesian rupiah has been rallying impressively over the past couple of days in the "post-Brexit" era. Amid severe uncertainty ahead of the Brexit referendum result, Indonesia's currency depreciated markedly on Thursday 23 June 2016. However, in the following days the rupiah started to strengthen, touching a two-month high against the US dollar (even though the US dollar has been strong as well due to the Brexit issue). Based on the Bloomberg Dollar Index the rupiah is now trading at IDR 13,175 per US dollar. What explains this recent rupiah strength?

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Indonesian assets are under pressure on Friday (24/06) due to the exiting of the United Kingdom from the European Union (EU). After votes of yesterday's referendum were counted the so-called "Brexit"is a reality. Nearly 52 percent of the 16.1 million voters chose to depart from the EU. Shortly after the news UK Prime Minister David Cameron announced he is to step down in October. Meanwhile, global financial markets are in deep red territory as investors are in search of safe haven assets such as the US dollar, Japanese yen, Swiss franc, and gold.

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Today's release of the economic rescue package was not able to put Indonesia's main stock index (IHSG) into green territory. Also, the Indonesian rupiah maintained its losing streak. The IHSG fell 0.04 percent to 4,169.83 points. Interestingly enough, the IHSG was rising previous to the release of the package. After the release, however, it started to weaken slightly, which seems to indicate that market participants were a bit disappointed with the contents of the package as it contained no quick fixes to the economy.

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As had been announced previously, today (23/08) the government of Indonesia released an 'emergency plan' that aims to improve the financial sector while restoring confidence in the country's fundamentals as turmoil emerged on Indonesia's stock exchange, bonds market and the rupiah. Economic minister Hatta Rajasa said that this plan consists of four packages. These four packages cover the current account deficit, rupiah performance, economic growth, purchasing power, inflation and investments.

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On Thursday (22/08), Indonesia's main stock index (IHSG) was not able to continue the rebound that occurred yesterday when the country's biggest pension fund, Jamsostek, began buying blue-chip stocks in a move to support the ailing index. Indonesia's benchmark index has now lost about 20 percent since its record peak in May 2013. Today, it fell 1.11 percent to 4,171.41 points. Eight sectoral indices weakened, of which the top losers were construction (-5.78 percent), basic industry (-3.42 percent), and finance (-2.39 percent).

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Concerns about Indonesia's weakening rupiah intensified on Wednesday (21/08) as the currency is now balancing on the psychological boundary of IDR 11,000 per US dollar. The rupiah continued its downward spiral today although its decline was limited due to the intervention of Indonesia's central bank (Bank Indonesia) that started selling US dollars again in an effort to support the rupiah. According to data compiled by Reuters, the rupiah has now fallen 10.7 percent this year.

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On Tuesday (20/08), Indonesia's benchmark stock index (IHSG) continued its decline with its fourth consecutive day of losses. Amid major concerns about Indonesia's economic growth, high inflation, tighter monetary policy and current account deficit, the IHSG fell 3.21 percent to 4,174.98 points. It means that the index now stands about 21 percent lower than its record peak in May 2013. Foreign investors have been pulling money out of the Indonesian market. According to Bloomberg, about USD $255 million has been retracted in the last two days.

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The government of Indonesia proposes to allocate IDR 336.24 trillion (USD $32.6 billion) for subsidy spending in the 2014 state budget draft: IDR 284.7 trillion (USD $27.6 billion) for energy subsidies and IDR 51.6 trillion (USD $5.0 billion) for non-energy subsidies. The proposed amount implies a 3.41 percent fall in total subsidy allocation compared to Indonesia's state budget in 2013. However, despite a reduction, subsidy expenditure is still large at 18.5 percent of total government spending (IDR 1,816.7 trillion).

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Analysts expect that Indonesia's benchmark stock index (IHSG) will end mixed today (20/08) after yesterday's large plunge amid heavy market concerns. Yesterday, the index dropped 5.58 percent to 4,313.52 points, the lowest since October 2011. Indonesia posted a current account deficit in the second quarter of 2013, while Thailand entered into a recession. The MSCI Emerging Market index¹, which includes both countries, fell 1.4 percent to a six-week low. Below a short overview of factors that caused negative sentiments on Indonesia's market.

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After two days of growth, Indonesia's main stock index (IHSG) became victim of profit taking on Thursday (15/08). Particularly domestic investors were eager to sell their Indonesian assets. Falling indices on Wall Street on Wednesday (14/08) in combination with global uncertainty about the end of the Federal Reserve's quantitative easing program made a negative impact on Asian stock indices, including the IHSG. Indonesia's central bank's decision to keep its benchmark interest rate at 6.50% was well-received by most investors.

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The foreign exchange reserves of Indonesia keep on falling from its historical peak of USD $124.64 billion in August 2011 to USD $92.67 billion at the end of July 2013. This development seems to highlight long-standing weaknesses in Indonesia's sovereign's external finances, as credit agency Fitch Ratings detected on several occasions before. The republic of Indonesia is currently characterized by four deficits, to wit a current account deficit, a balance of payments deficit, a trade balance deficit and a fiscal deficit.

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After Wall Street turned back into the green zone on Tuesday (13/08) and was accompanied by continued rising stock indices in Europe, it provided good support for Asian stock indices on Wednesday (14/08), including Indonesia's main stock index (IHSG). Indonesian mining commodities and plantation stocks fell but these losses were offset by rising big cap stocks (particularly finance stocks) and speculation that Indonesia's central bank will keep its benchmark interest rate (BI rate) at 6.50 percent.

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