Indonesian Equites and Bonds Saw Heavy Selloff as Economic Concerns Looms

Indonesian stocks and bonds saw heavy selloff amid concerns on rising inflation and slowing global economic growth.

The country’s firs quarter GDP figure came slight above market forecast while April’s inflation numbers accelerated faster than forecasted.

Jakarta Composite Index slumped as much as 4.6% underscoring the steepest drop for the equity benchmark since September 2020, while bonds tumbled, sending yields to the highest in nearly two years.

The rupiah fell 0.3% to its weakest in more than nine months.

In the wake to Federal Reserve’s interest rates hike, Indonesian markets were on Eid al-Fitr holidays – resuming markets on Monday.

“Other markets have responded to the 50 basis-point hike by the Fed, so now it’s our turn,” said Suria Dharma, director at Samuel Sekuritas in Jakarta. “The Indonesian markets are just playing catch-up after the holiday.”

Indonesia’s 10-year government bond yield surged 27 basis points to 7.26%, the highest since mid 2020.

According to Bloomberg, Bank Indonesia is ready to intervene to stabilize the currency.

The country’s GDP in the first quarter grew 5.01% year over year, according to the official numbers. Inflation on the other hand accelerated at an almost three-year high of 3.47% in April from a year earlier. However, the figure is yet under central bank’s target range of 2%-4%.