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Indonesia Stocks Jump Most in 20 Years in ‘Technical Rebound’

Tassia Sipahutar and Harry Suhartono
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Indonesia Stocks Jump Most in 20 Years in ‘Technical Rebound’

(Bloomberg) -- Indonesian equities jumped the most since 1999 after a holiday on Wednesday, as they catch up with a huge regional rebound earlier this week.

The Jakarta Composite Index, whose plunge has triggered trading halts several times recently, surged 10% on Thursday, the best performer in the region. Asian stock benchmark was little changed after soaring 5.6% on Wednesday, the biggest rally since 2008.

Still, Indonesian stocks have slumped 20% since the start of the month as virus infections keep rising. In a bid to counter the economic fallout of the pandemic, the government moved a step closer to easing a legal cap on its budget deficit to allow a ramp-up in spending. It is also considering issuing rupiah-denominated recovery bonds for the first time to help private companies.

“This is only a temporary technical rebound because JCI has dropped by quite a lot recently,” said RHB Sekuritas analyst Michael Wilson Setjoadi. “There are no positive domestic catalysts, with Covid-19 cases continue to rise.”

The number of confirmed Covid-19 cases in the nation rose to 790 as of Wednesday, with 58 fatalities. The country’s number of death from the virus is the highest among its Southeast Asian peers and has raised concerns among investors on its ability to deal with the outbreak.

Indonesia is facing growth prospects that are worse than during the global financial crisis as the pandemic spreads to more regions in the archipelago, prompting authorities to impose partial lockdowns in several regions including capital Jakarta.

Winners

Markets across the region briefly gained after the U.S. Senate passed a historic $2 trillion rescue plan to respond to the economic and health crisis caused by the pandemic, putting pressure on the House to pass the bill quickly and send it to President Donald Trump for his signature.

Senate Passes $2 Trillion Virus Rescue Plan; Sends Bill to House

Banks and consumer sectors led today’s rally. PT Bank Central Asia jumped 17% while PT Bank Rakyat Indonesia soared 20%. Consumer goods producer PT Unilever Indonesia rallied 19%, all providing biggest boost for the benchmark gauge.

The rupiah rose as much as 1.8% against U.S. dollar to strongest since October 2015, while yield on 10-year government bonds fell 18 basis points. Despite the strong rally, some analysts are still treating the rebound with caution as the outbreak of the disease seems far from over.

“Going forward, as the coronavirus case still rising, the volatility in the financial market will remain.” Evan Hadiwidjaja, head of research at PT Sinarmas Sekuritas.

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