The Jakarta Composite Index (JCI) continued its weakening trend during Tuesday’s final session, triggered by external sentiment related to expectations of a rate increase by the US Federal Reserve, which is expected to come sooner than expected.
The index weakened by 82.40 points or 1.62 percent to 5,026.02 while the index of the 45 most liquid stocks (LQ45) was down by 17.05 points or 1.98 percent to 862.08.
“The main trigger factor of the JCI weakening was external sentiment, two of factors of which were the expectation of the Fed rate increase and the decline in global oil prices,” PT Valbury Asia Asset Management director of investment, Andreas Yasakasih, said as quoted by Antara news agency in Jakarta on Tuesday.
He said the expectation of the Fed rate increase had led investors, especially foreign investors, to secure their assets in developing countries’ markets.
“The Fed rate increase will mean yields in the US are more attractive,” Andreas said.
He further explained that the weakening of the rupiah against the US dollar had added negative sentiment to the domestic stock market. The dollar strengthening was due to high demand for foreign currencies for debt interest payments ahead the end of the year.
On Tuesday, the Indonesian Stock Market recorded 347,902 transactions with 6.80 billion shares worth Rp 6.44 trillion (US$ 499.42 million) changing hands. Sixty-nine stocks strengthened while 276 others weakened and 60 stocks were unchanged.
In regional markets, the Hang Seng Index weakened by 357.35 points (1.55 percent) to 22,670.50; the Nikkei Index was down by 344.08 points (2.01 percent) to 16,755.32 and the Straits Times Index weakened by 79.05 points (2.40 percent) to 3,215.09. (ebf)(+++)
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