BENGALURU: Indonesian stocks rose on Friday after the government announced regulatory reforms and the chief economic minister assured increased market transparency and improved corporate governance.
Meanwhile, Asian currencies eased as the dollar rose after US President Donald Trump said he would name his nominee for the Federal Reserve head.
The MSCI index of emerging market currencies was down 0.2 percent, while MSCI’s gauge of Asian emerging market equities fell 1.5 percent. Stocks in Jakarta gained 1.2 percent, after authorities on Thursday took steps to allay index provider MSCI’s concerns about share ownership and trading transparency that prompted its warning of a possible downgrade to “frontier” market status.
The benchmark was set for its biggest weekly fall in 11 months after tumbling 8.3 percent over Wednesday and Thursday, prompting verbal reassurances from the country’s chief economic minister and the stock exchange chief’s resignation.
“Indonesia’s rapid and coordinated response underscores strong regulatory commitment and growing market maturity,” said Andrey Wijaya, research head at RHB Indonesia.
With measures such as clarity on free floats, disclosure of ultimate beneficial owners, and a 15 percent free-float threshold, authorities are tackling credibility gaps without undermining market stability, he added.
“While the announcement has supported a rebound in the JCI … we see that market volatility is likely to persist until MSCI releases clearer guidance on its revised methodology for Indonesia.” The rupiah fell 0.2 percent, and is headed for its third straight monthly loss as MSCI’s warnings added to growing concerns surrounding Indonesia’s economic landscape, including central bank independence and fiscal woes.
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