Indonesian shares jumped 149 points, or 2.6%, to 5,895 in Wednesday morning trade, extending the previous session’s rally on broad-based gains across major sectors. The market continued to rebound from last week’s six-year low as investors responded positively to Bank Indonesia’s surprise 25 bp rate hike to 5.5% on Tuesday, a move aimed at stabilizing the rupiah after a series of record lows.
Sentiment was further underpinned by a commitment from sovereign wealth fund Danantara not to take profit margins on strategic commodity exports and to honor existing contracts under the new centralization framework. Externally, annual inflation in China, Indonesia’s top trading partner, held steady at 1.2% in May, pointing to stable consumer demand.
Gains were partially capped, however, by a 32% increase in domestic non-subsidized fuel prices taking effect today, as energy import costs climb on elevated global crude prices and a weaker rupiah. Among the standout performers were Barito Pacific (up 14.2%), Bank Negara Indonesia (8.6%), Bank Central Asia (7.3%), and Pertamina Geothermal (4.2%).
