Composite Stock Price Index (CSPI) began trading today with a deep correction of 1.19%. (Credit : CNBC)

Trade balance deficit, CSPI collapsed to 1.09%

Siti Fatimah Adri
Politics & Economic
News Flash Indonesia
Aug 16, 2019
1838
Unhappy data releases from a number of countries with largest economy in the world. As the Composite Stock Price Index (CSPI) which began trading today with a deep correction of 1.19%. This correction recorded by the benchmark stock index in Indonesia was 0.85% to level of 6,212.28.

JCI correction is in line with all the major Asian stock exchanges that are being compactly traded in the red zone, such as Nikkei Index collapsing 1.37%, Shanghai Index tumbled 1.11%, Hang Seng Index fell 0.67%, and Straits Times Index was corrected 1.43%. To note, trading on South Korean stock exchange is closed in line with the commemoration of Liberation Day.

It turned out that Indonesia's trade balance couldn’t help this correction. Because if Indonesian trade balance actually posted a deficit that was deeper than expected in the July 2019 period, there would be fears that the current account would again swell in the third quarter of 2019.

To note, in second quarter of 2019 Bank Indonesia (BI) noted that CAD penetrated the level of 3% of GDP, precisely 3.04%. Whereas in first quarter of 2019, CAD was only at 2.6% of GDP. Nominally, CAD in the second quarter of 2019 was valued at US $ 8.44 billion.

With the trade balance deficit in July 2019 being much smaller than expected, there is hope that CAD in third quarter of 2019 will narrow. Unfortunately, external conditions that are not conducive to make selling continue to be carried out in the stock market of the country.

Property sector was the least affected sector with a decline of only 0.02%. Second-liner shares with less market capitalization compared to other issuers are holding back fall of the sector, such as: PT Pollux Properti Indonesia Tbk / POLL (+ 24.84%), PT Lippo Karawaci Tbk / LPKR (+0, 76%), PT Pikko Land Development Tbk / WHEEL (+ 2.38%), PT Sitara Propertindo Tbk / TARA (0.72%), PT International Lestari Tbk / RIMO (+ 0.79%).

The sentiment surrounding property sector is actually still quite positive when the trend in cutting interest rates. This can be a positive stimulus for property buyers who use credit facilities, especially from banks.

BI Deputy Governor, Dody Budi Waluyo said that his party had the opportunity to reduce the benchmark interest rate. It’s planned that Bank Indonesia (BI) will hold a Board of Governors' Meeting (RDG) on August 21-22 next week. In the RDG BI will announce its latest benchmark interest rate policy or BI 7 Day RR which is currently at the level of 5.75%.

Source: https://www.cnbcindonesia.com/market/20190815122711-17-92168/neraca-dagang-tak-kuasa-jadi-penolong-ihsg-ambruk-109/2