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Jakarta Post

Indonesian stocks take a hit as global markets grapple with coronavirus concerns

  • Adrian Wail Akhlas

    The Jakarta Post

Jakarta   /   Mon, January 27, 2020   /   09:49 pm
Indonesian stocks take a hit as global markets grapple with coronavirus concerns A man passes the Indonesia Stock Exchange's (IDX) iconic round table in this undated file photo. (thejakartapost.com/Wienda Parwitasari)

Indonesia’s stock market took a tumble on Monday as world shares took a hit from investor concerns over the economic impact of China’s spreading coronavirus.

The Jakarta Composite Index (JCI), the Indonesia Stock Exchange’s (IDX) main gauge, fell 1.78 percent on Monday to 6,133.21 on trading close.

Bank Indonesia (BI) recorded capital outflows of Rp 980 million (US$72,128) in the stock exchange as per Friday amid the outbreak of the virus, Governor Perry Warjiyo said.

Indonesia also recorded capital outflows of Rp 2.3 trillion in matured BI certificates (SBI), he added.

“Capital outflows from the stock exchange were the results of geopolitical risks and rising market uncertainty caused by the new coronavirus,” Perry said on Friday.

On Monday, however, foreign investors bought Rp 161 billion worth of stocks more than they sold amid a selling-spree in global stock markets.

World shares fell to their lowest in two weeks on Monday, with the MSCI All-Country World Index, which tracks shares across 47 countries, down 0.42 percent to its lowest since Jan. 13, Reuters reported. Demand spiked for safe-haven assets such as the Japanese yen and Treasury notes.

Meanwhile, oil prices slumped 2 percent as the rising number of cases of the new strand of coronavirus and city lockdowns deepened concerns over the demand for crude. Benchmark Brent crude fell 2.1 percent or $1.28 a barrel to $59.40, having earlier dropped to $58.60, its lowest since late October.

The world is in a state of alarm after the 2019 novel coronavirus (2019-nCoV), which bears similarities to severe acute respiratory syndrome (SARS), was first detected on Dec. 31, 2019, in Wuhan, China. The new strain has infected 2,800 people and killed at least 80 as of ‪Monday morning, according to AFP.

The virus has also spread to other countries, including the United States, Australia, Japan, Singapore and Hong Kong, which have all reported confirmed cases of the Wuhan coronavirus.

So far this year, Perry went on to say, capital inflows reached Rp 26.1 trillion from government debt papers (SBNs) and Rp 2.57 trillion from the country’s stock exchange, thus resulting in Rp 25.79 trillion in inflows as per Friday.

“BI believes that the inflows come from the trust of market players and investors, including foreigners to Indonesia’s economy,” said the BI governor.

 However, with the expanding coronavirus outbreak posing risks to the country’s economy and its citizens, calls are mounting for Indonesia to boost its preparedness against the Wuhan coronavirus, even though the country has no confirmed cases as of the time of writing.