Omnibus Law in the Midst of Recession

The JCI fell sharply by -7.03% in September, ending a long market rally which started at the end of March. This was accompanied by a massive amount of foreign net sell which recorded at IDR 15.5 Trillion. Meanwhile, the Omnibus Law on Job Creation was passed in early October which will impact the economy and stock market. Furthermore, as Indonesia set to enter its first recession in 20 years, we revisit the 1998 monetary crisis to get a glimpse on how investors can prepare for a recession.

Import Remains Weak, Dimmer Outlook Ahead

In August 2020, Indonesia had a trade balance surplus of USD 2.33 Bn. However, the still weak import figure indicated that both domestic production and demand remained low.
Meanwhile, Bank Indonesia decided to keep the BI-7DRRR rate at 4.00% in order to maintain stability of Indonesian Rupiah. The re-enforcement of PSBB potentially will hold down the economic recovery.

Government Spending to Support Recovery

The JCI had a modest monthly gain of 1.73% last month, continuing its rally since March. Key economic indicators continued to improve, highlighted by Foreign Reserves which reached all-time high level and PMI Manufacture returning to expansion zone. Meanwhile, the announcement of 2021 State Budget gave us some indications on which sectors will reap benefit next year.

Entering Recession Zone

Indonesia economy contracted by 5.32% YoY in 2Q20 or 4.19% QoQ, as the full effects of Covid-19 were felt the most during that period.

A Quick Look at Potential LQ45 Newcomers

The LQ45 Index will soon enter its next cycle of rebalancing for the August 2020-January 2021 period. As one of the top benchmark indices in the country, changes in LQ45 constituents will have many implications as investors respond to their respective portfolios.As we approach the effective date on 1 August 2020, we try to identify the most likely stocks to be included in the new LQ45 list.

Indonesia Market Insight | Slowly Moving to Recovery

Some of the economic data releases in June 2020 has shown slight improvements such as Forex Reserve which currently stood at USD 130.50 Bn (up from USD 127.88 Bn in previous month) and Trade Balance which recorded a May Surplus of USD 2.09 Bn (up from a deficit of USD 0.34 Bn).