Indonesia Stocks, Rupiah Fall Amid Fears Over Tougher Virus Lockdown

  • The plunge in Indonesian and Philippine stocks on 3 Aug 20 shows how quickly investor sentiment can turn when there’s a delay in economic reopening or stay-at-home orders are reinstated.
  • Indonesia’s equity benchmark tanked as much as 4.3% after rising infections forced Jakarta to delay the easing of social distancing measures within the capital city by at least another two weeks.
  • The Philippine Stock index slumped 3.6%, its worst performance in seven weeks, after the nation said it will put its capital Manila back on a stricter lockdown starting 4 Aug 20 as virus cases surged following an easing in curbs. The two markets were the top losers in Asia on 3 Aug 20.
  • Any restart of broad lockdowns would be a threat to the global economy and risk markets. The worldwide stock rebound has largely stalled since Jun 20 as cases flared up after restrictions were relaxed. Consumption, investment and the nascent recovery in travel could freeze again in such a scenario.
  • Indonesia is scheduled to announce its 2Q20 GDP on 5 Aug 20 with economists surveyed by Bloomberg projecting a 4.7% contraction, steeper than the 4.3% drop estimated by President Joko Widodo.
  • The country reported the lowest annual inflation in two decades with consumer prices in Jul 20 rising just 1.5%, thwarting hopes of a V-shaped economic recovery, according to Yuanta Securities Co.
  • “Some investors are pulling out of the equities market as they speculate that the second quarter GDP may come in worse than what the government expected,” Isnaputra Iskandar, head of Indonesia research at Maybank Kim Eng Securities, said, adding that “the worst might be behind us, but how strong the recovery will be remains in question.”

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