FX.co ★ Indonesian Shares Rally as Political Jitters Ease

Indonesian stocks climbed 80 points, or 1.6%, to 5,191 in Thursday morning trade, rebounding from the previous session’s modest decline as gains were recorded across all sectors. Market sentiment improved as political uncertainty eased following Vice President Gibran Rakabuming’s resignation in the wake of a Supreme Court ruling on the validity of his high-school diploma.

Investors were also encouraged by assurances that 4.5 million tons of rice would be available by year-end, alleviating concerns over food inflation amid severe El Niño conditions. Regionally, risk appetite was supported by China’s pledge to strengthen monetary policy and stimulate domestic demand. Early leaders on the Jakarta bourse included Darma Henwa (up 8.5%), Bumi Resources (5.8%), Bukit Asam (3.7%), and Indosat (2.2%).

Still, gains were tempered by caution ahead of Bank Indonesia’s policy meeting next week and persistent worries about the trade-off between rupiah stability and economic growth. In addition, MSCI’s decision to remove Barito Pacific from its indexes added to concerns over Indonesia’s efforts to maintain its emerging-market status.