Indonesian stocks took a large dive on today's trading day (19/08) at the Indonesia Stock Exchange. The IHSG (the index of all listed stocks) fell 5.58 percent to 4,313.52 points as negative market sentiments caused foreign investors to pull money out of the Indonesian market. Investors are highly concerned about a number of macroeconomic data that have been released recently. These data indicated the slowest economic growth since Q3-2010, inflation at a four-year high and a widening trade deficit.

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Today, three Indonesian companies will be listed on the Indonesia Stock Exchange (IDX). These companies are Victoria Investama (VICO), Multipolar Technology (MLPT), and Bank Mestika Dharma (BBMD). This year so far, 21 Indonesian companies have conducted their initial public offering (IPO). Eight others are still planning to conduct one in 2013. Indonesia's stock exchange has seen large capital outflows in the last month due to international concerns about a stop to the US quantitative easing program.

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The central bank of Indonesia (Bank Indonesia) decided today to raise its benchmark interest rate by 25 basis points to 6.0 percent. The decision was made amid concerns about the inflationary impact of a hike in subsidized fuel prices (planned this June) as well as increasing uncertainty in global financial markets as central banks' may scale back stimulus programs. The Indonesian rupiah has weakened considerably in 2013 and forms the worst performer in Asia after the Japanese yen among the 11 most-traded currencies tracked by Bloomberg.

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Yesterday (07/06), the main index of the Indonesia Stock Exchange (IHSG) fell by a total of 2.7 percent to close at 4,865.32 points. The size of this single day fall of Indonesia's IHSG has not been seen since November 2011 and illustrates waning confidence in Indonesia's economy. For eleven days in a row, foreign investors have been engaged in net selling as they have been concerned about ongoing uncertainty regarding the price hike of subsidized fuel, the continuing trade deficit as well as the steady fall of the IDR rupiah.

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Cipaganti Citra Graha, an Indonesian transportation company, will offer 40 percent of its stock equity to the public through an initial public offering (IPO). The company releases 2 billion shares with a nominal value of IDR 100 per share. These 2 billion shares consist of 1.75 billion new shares as well as 250 million shares that are owned by its holding company Cipaganti Global Corporindo. The company, which will be listed on 9 July 2013, will reserve 40 million shares for the employee stock allocation (ESA).

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Market capitalization of the Indonesia Stock Exchange (IDX) has surpassed its psychological boundary of IDR 5,000 trillion (USD $512.82 billion) last week, supported by the new record high level position of the Indonesia Stock Index (IHSG) on Friday at 5,145.68 points. Up to 17 May 2013, the IHSG gained 18.41 percent this year, thus outperforming all other major stock indices in Asia except for the Philippines and Japan's Nikkei, which gained 41.64 percent this year amid an aggressive stimulus plan of the central bank of Japan.

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Up to Wednesday (15/05/13), 69 Indonesian companies have announced to pay out dividends for the financial year 2012 to their shareholders, totaling a combined amount of IDR 64.1 trillion (USD 6.57 billion). This amount is equivalent to 41 percent of 2012's net profit of the 69 companies. In the weeks ahead, it is expected that more companies will announce dividend payouts. In 2012, more than one hundred listed companies on the Indonesia Stock Exchange (IDX) paid out dividends (of a total number of 462 listed companies at end 2012).

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Indonesian newspaper Investor Daily reported that stocks at the Indonesia Stock Exchange are still relatively cheap compared to regional stock indices. Currently, the price to earnings ratio (P/E ratio) of Indonesia's main index is about 18. In contrast, South Korea's Kospi index amounts to 34, Japan's Nikkei 28, Taiwan's Taiex 23, and Philippines' PSE stands at 23 times earnings. As the Indonesian economy as well as its companies' profit figures are projected to grow, the P/E is expected to fall to 16 this year.

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Nippon Indosari Corpindo, Indonesia’s largest producer of bread products, will not pursue a stock split to improve its stocks' liquidity on the Indonesia Stock Exchange (IHSG). According to analysts, the company's stocks are fairly active and thus will not need such a measure. Nippon Indosari's stocks have fallen by around 11 percent this year. This performance is in stark contrast with 2012 when it gained 112.3 percent during the year.

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Director of Corporate Valuation of the Indonesia Stock Exchange (IHSG), Hoesen, said that the stock exchange expects 150 companies to conduct an initial public offering (IPO) on the IHSG within the next five years. In other words, an average of 30 newly-listed companies per year. Also, the amount of domestic investors in Indonesia is expected to increase to become one percent (of the 240 million-numbering population).

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On the last trading day of the week, the benchmark stock index of Indonesia (known as the Jakarta Composite Index of IHSG) rose 0.06 percent to the level of 4,973.06 points. Trading volume was low as investors are still carefully monitoring political and economic developments in Indonesia. Earlier in the week, political uncertainty increased when the country's second-largest political party (Golkar) decided to join the coalition that supports the Prabowo Subianto and Hatta Rajasa pair in the July presidential election.

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Investors' appetite for mining and plantation stocks managed to support the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) on Thursday's trading day (22/05). After the recent decline of the IHSG, market participants continued to accumulate stocks that are considered cheap. Furthermore, indices on Wall Street on Wednesday were up and impacted positively on Asian indices on Thursday, thereby providing positive market sentiments for the IHSG.

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Although initially the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) declined shortly after the opening on Wednesday (21/05), during the remainder of the day it went up. This is a trend which we often detect: after a sharp fall we see a rebound on the following day as investors want to take advantage of 'cheap' stocks. However, the rebound was only limited as investors prefer to wait and see for further market sentiments first. The main positive factor today were rising Asian stock indices.

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Similar to when the market expects the release of positive companies' corporate earnings reports, the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) gained significantly at the start of today's trading day (19/05) as the market waited for the official declarations of the presidential and vice-presidential candidates that will participate in the presidential election that is scheduled for 9 July 2014. The two pairs that will compete are the Joko Widodo-Jusuf Kalla pair and the Prabowo Subianto-Hatta Rajasa pair.

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After a promising start of the day, the rupiah exchange rate and Indonesian stocks lost all of their earlier gains ahead of closing on Monday day (19/05). Around 10:00 local Jakarta time, the rupiah rate appreciated more than 0.60 percent to IDR 11,346 per US dollar on speculation that Jusuf Kalla would be nominated as Joko "Jokowi" Widodo's running mate in the presidential election (9 July 2014), backed by a coalition consisting of the PDI-P, NasDem, PKB and Hanura. After the official declaration, however, the currency lost all of its earlier gains.

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The week ended well for both the Indonesian rupiah exchange rate and the benchmark Jakarta Composite Index (IHSG). Based on the Bloomberg Dollar Index, the rupiah appreciated 0.30 percent to IDR 11,413 per US dollar at the end of Friday's trading day (16/05). Meanwhile, the IHSG surged 0.80 percent to finish just above the psychological level of 5,000 points. The good performance was supported by investors' positive response towards the latest political developments in Indonesia.

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The benchmark stock index of Indonesia - known as the Jakarta Composite Index or IHSG - rose 0.17 percent to 4,921.39 points on Tuesday (13/05), impacted by investors' reaction to positive earnings reports of Indonesian coal miners in the first quarter of 2014. Today, foreign investors recorded net buying of IDR 64 billion (USD $5.6 million) and accounted for 31 percent of trading activity. However, investors remain cautious ahead of the presidential election that is scheduled for 9 July 2014 and wait for more clarity about the (vice) presidential candidates that will compete.

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Contrary to most Asian stock indices, the benchmark stock index of Indonesia (known as IHSG or the Jakarta Composite Index) declined on Thursday (08/05). Positive sentiments that were provided by the BI rate (Indonesia's benchmark interest rate) that was kept at 7.50% in today's Bank Indonesia Board of Governors' Meeting, and China's higher-than-expected trade balance in April 2014 (USD $18.5 billion), were offset by the depreciating rupiah exchange rate and foreign net selling of Indonesian stocks. The IHSG fell 0.02 percent to 4,860.89 points.

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Completely opposite to our expectations, the benchmark stock index of Indonesia (known as the Jakarta Composite Index or IHSG) managed to climb 0.57 percent to 4,862.02 points on Wednesday (07/05). The gain was unexpected as there were no clear factors that could provide positive market sentiments. Moreover, today's Asian stock indices were mostly down. Coincidence or not, tomorrow Bank Indonesia will announce whether its benchmark interest rate (BI rate) - currently set at 7.50 percent - will be changed or maintained.

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As I have mentioned before, Indonesia's benchmark stock index (better known as the Jakarta Composite Index or IHSG) runs the risk of declining amid a lack of domestic or external positive market sentiments. Despite the indices on Wall Street being up on the higher than expected markit services PMI as well as ISM-non manufacturing PMI, it was unable to uplift sentiments in Jakarta. Market participants seem to wait & see in the first week of May 2014, evidenced by the reduced trading volume and value of transactions.

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