Indonesia stocks up on rate cut, other SE Asia markets cautious

Visitors stand next to an electronic stock board at the Indonesia Stock Exchange in Jakarta. (Reuters file photo)

Indonesian shares ended higher on Wednesday after the central bank unexpectedly cut the interest rate to boost sluggish lending and growth while most other Southeast Asian stock markets were cautious ahead of a gathering of central bank chiefs hosted by the US Federal Reserve.

Indonesia became the second major Asian economy after India to cut its benchmark policy rate this year, with Bank Indonesia (BI) bringing the 7-day reverse repurchase rate down by 25 basis points to 4.5%.

Indonesian stocks ended 0.6% higher, helped by energy and consumer staples stocks. 

Further easing from BI seems likely before the year-end, ING Research said in a note.

Meanwhile, other Southeast Asian stock markets moved sideways, in line with broader Asian shares, which initially inched up to a two-week high, before giving up the gains to trade flat.

Investors turned their focus to the US central bank’s annual conference in Jackson Hole, Wyoming this week where Fed chair Janet Yellen and European Central Bank President Mario Draghi are slated to speak.

“For this week, I think Asian markets will just take their cue from Jackson Hole central bank event in which the spotlight may likely focus on Yellen. In other words the Asian markets will just track the US markets,” said said Edgar Lay, junior equity analyst with AB Capital Securities.

In the Philippines, shares fell 0.2%, as industrials and financials lost ground. Ayala Land fell 0.9%, while BDO Unibank lost 0.5%.

“I think this is not a surprise, the ghost season has already commenced and historically the stock markets were sluggish during this period showing less-than-normal trading volume,” Lay said.

Analysts say China’s “ghost season” stalls momentum in the markets as some Chinese investors reduce trading during this period.

“Investors are waiting for a catalyst that will further push the markets up or down,” Lay said.

Singapore shares fell 0.1%, weighed down by financials.

The city-state’s headline consumer price index in July rose 0.6% from a year earlier, helped by higher retail and water prices, data showed on Wednesday.

Malaysian shares edged down marginally as losses in financials more than offset the gains in telecom and industrials. AMMB Holdings fell 2.3%, while Hong Leong Financial Group fell 0.8%.

Southeast Asian stock markets

 

 

Current

Previous

% change

Indonesia                

5,914.02

5,880.29

+0.57

Malaysia       

1,772.94

1,774.22

-0.07

Philippines                 

7,998.75

8,015.93

-0.21

Singapore                 

3,260.05

3,263.79

-0.11

Vietnam        

765.98

761.26

+0.62

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