Emerging market assets, including Indonesian stocks and the rupiah, are being supported today by the release of China's official third quarter gross domestic product (GDP) growth figure. The economy of China expanded 6.9 percent (y/y) in Q3-2015, slightly beating expectations (at 6.8 percent y/y) on relatively robust spending by Chinese consumers. Most emerging market assets strengthened after the news as a slightly better Chinese economy (implying higher Chinese demand) impacts positively on other countries in the Asian region on expectation of improving export performance.

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Agus Martowardojo, Governor of the central bank of Indonesia (Bank Indonesia), said there are still 320 local companies that have not complied with the central banks' hedging requirements regarding foreign loans. A Bank Indonesia study conducted in late-2014 showed that the country’s private sector foreign debt is vulnerable to several risks i.e. currency risks, liquidity risks and overleverage risks due to unhedged loans.

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As expected, the central bank of Indonesia (Bank Indonesia) left its benchmark interest rate (BI rate) unchanged at 7.50 percent at the October Board of Governor's meeting on Thursday (15/10). Meanwhile, Bank Indonesia maintained the deposit facility rate and the lending facility rate at 5.50 percent and 8.00 percent, respectively. Rates were left unchanged as the global economic outlook remains highly uncertain. This jeopardizes the stability of the Indonesian rupiah.

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After Islamic New Year celebrations, Indonesia’s financial markets reopened on Thursday (15/10). The sharp appreciation of the Indonesian rupiah on Thursday morning is remarkable. By 10:10 am local Jakarta time, the rupiah had appreciated 2.36 percent to IDR 13,295 per US dollar (Bloomberg Dollar Index) hence extending last week’s gains when Indonesia’s currency strengthened around 9 percent against the greenback. Emerging markets assets are still gaining on signs that the Federal Reserve will not raise US interest rates in the short-term.

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In a draft regulation, Indonesia's Financial Services Authority (OJK), the government agency that regulates and supervises the financial services sector, proposes that the country's leading banks have set aside more capital - between 1 and 3.5 percent of their risk-weighted assets (a "capital surcharge") by December 2015 - as a buffer against financial market volatility risks. The new policy aims to strengthen Indonesia's financial system amid the country's economic slowdown and severe external pressures (looming higher US interest rates and China's slowdown).

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On Tuesday (13/10), Chinese authorities announced that the country's trade balance widened to 376.2 billion yuan in September 2015, beating forecasts. China's exports contracted less than expected at -1.1 percent. However, China's imports (-17.7 percent) plunged more than expected and now recorded the eleventh month of straight declines. Although the balance is better than had been forecast, China's latest import and export data show again that the world's second-largest economy is plagued by a persistent slowdown.

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The Indonesian rupiah is slightly weakening on Monday (12/10) as market participants are responding to Federal Reserve Vice Chairman Stanley Fischer's remarks in Lima (Peru) where he attended the latest IMF meeting as well as a banking seminar. Fischer said that there could still be a Fed Fund Rate hike before the end of the year, provided that US economic data (and global circumstances) allow such a move. Based on the Bloomberg Dollar Index, the rupiah had depreciated 0.02 percent to IDR 13,414 per US dollar by 12:15 pm local Jakarta time.

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On 11 October 2015, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic subjects such as the government's third stimulus package, the remarkable performance of Indonesian stocks and the rupiah, growth forecasts from the World Bank and the IMF, Indonesian car sales, a palm oil industry update, and more.

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The Indonesian rupiah is having one of its strongest days in recent history. By 13:00 pm local Jakarta time, the rupiah had appreciated 3.90 percent to IDR 13,346 per US dollar (Bloomberg Dollar Index). After the release of the Federal Reserve's FOMC minutes on Thursday (08/10), emerging markets assets have strengthened robustly on speculation that the Fed will not raise US interest rates anytime soon. Rebounding commodity prices also support the performance of the rupiah. Indonesia's currency is set to post its best weekly gain in more than a decade.

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After the release of the minutes of the Federal Reserve's 16-17 September policy meeting (FOMC), Indonesian assets (rupiah and stocks) strengthened significantly on Friday (09/10). The minutes, released on Thursday (08/10), show that the US central bank prefers to postpone a US interest rate hike for now in order to wait for additional information that informs whether the US economic growth outlook will not deteriorate due to global conditions. Moreover, US inflation remains stuck at low levels (far below the Fed's 2 percent target) due to lower oil prices and the strong US dollar.

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The upward movements of both American and European stock indices on Friday (03/05/13) provided good support for today's performances of indices in Asia, including the Indonesia Stock Index (IHSG). After having been hit hard for two consecutive trading day's, the IHSG rebounded despite foreign investors still selling off their Indonesian stocks. Others, however, use this momentum to hunt for stocks that are now considered cheap after last week's fall.

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International financial services company Standard & Poor's (S&P) downgraded its outlook on Indonesia’s BB+ rating from positive to stable as the agency assessed that Indonesia's reform momentum is fading and the external profile is weakening. The decision came as a surprise as Indonesia's government had just declared to reduce its massive spending on fuel subsidies starting from next month. These subsidies were the main reason why S&P had not upgraded Indonesia's credit rating to investment grade yet.

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The Indonesia Stock Index (IHSG) fell victim to large profit taking on Thursday's trading day (02/05/13) after having set a new record yesterday. Market players are probably concerned about the 'May Cycle' which refers to the traditional fall of the IHSG in the month of May. But negative market sentiments were particularly brought on by Standard & Poor’s revised outlook on Indonesia’s BB+ rating from positive to stable. It triggered a 1.32 percent correction in Indonesia's stock index.

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Even though American and European stock indices were positive on Monday (in fact S&P 500 set a new record) it did not impact directly on the performance of Indonesia's main stock index (IHSG) on Tuesday (30/04/13). In the first session, the IHSG's peak at 5,014 points was only short-lived and quickly lowered again. In the second session, however, the index started to show more solid growth (despite the ongoing uncertainty about Indonesia's subsidized fuel price) as Asian stock markets were mostly up.

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After two consecutive days of decline, the Jakarta Composite index (IHSG) had no intention to continue its fall. Indonesia's main index was able to rise 0.43 percent to 4,999.75 points on Monday 29 April 2013. Stocks that had been weakening in recent days were popular among investors. Moreover, both Asian stock indices and foreign net purchases of Indonesian stocks supported Indonesia's index, although it fell short of reaching the psychological boundary of 5,000 points.

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On Friday's trading day, the Indonesia Stock Index (IHSG) started in an upward direction. However, as it felt the impact of European stock indices, that mostly opened lower, the IHSG weakened 0.32 percent to 4,978.51 points. Moreover, most other Asian indices were down (except for Hong Kong's HSI) and thus contributed to the IHSG's fall. Market participants also seem to fear the annual 'May Cycle' of the IHSG, which involves the traditional large-scale selling of IHSG stocks.

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Today, the Jakarta Composite Index (IHSG) was under pressure from the start of the trading day. It was negatively affected by mixed Asian indices as well as yesterday's mixed American indices (where the Dow Jones Index weakened whereas other American indices gained). It made investors, in particular foreign investors, eager to sell parts of their stock portfolios. At the end of today's trading day, the IHSG stood at 4,994.52, a 0.34 percent fall compared to yesterday.

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Positive moving stock indices in America and Europe on Tuesday (responding to various good corporate Q1-2013 data) were able to offset negative influence caused by weak manufacturing data from China and Europe. As a result Asian indices rose on Wednesday, including the Indonesia Stock Index (IHSG) which managed to reach beyond the psychological boundary of 5,000 points. The index ended at the level of 5,011.61, a 0.73 percent gain compared to the previous trading day.

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Rising American and European stock indices last Friday, helped to support Asian stock indices today (22 April 2013), including the Indonesia stock index (IHSG). However, the ongoing drama brought on by last Saturday's earthquake in China, impacted on the China stock index as well as on other Asian stock indices, including the IHSG. As the IHSG has been showing signs that it is overbought, market participants preferred to sell portions of their stock portfolios, resulting in a limited fall of the IHSG.

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Despite non-conducive market sentiments, there was no stopping to the Indonesia stock index (IHSG) as it managed to reach its next psychological boundary on Thursday 18 April: 5,000 points. A fall in American energy and telecommunication stocks on the previous day - after corporate data indicated less-than-expected performances in the first quarter - buried hopes that the Dow Jones Index would hit another peak. As a result Asian stock indices were mostly negative.

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