Analyzing Trump’s effects for Indonesia

JAKARTA. Trump’s speech has suppressed global stock markets. Fortunately, the Trump’s effects were not significant to Jakarta Composite Index (JCI).

Analyst at Panin Sekuriras Frederik Rasali said that Trump’s speech was more a comment rather than a policy announcement. “Therefore, we assume that this did not bring significant impact,” he said.

Analyst at Binaartha Prama Sekuritas Reza Priyambada added, JCI dropped by 0.16% to 5,292.75 on Thursday (12/1). This was indirectly driven by Trump’s statements.

One day before Trump delivered his speech, most of global stock markets, mainly in Europe, closed stronger. When trading in this zone has closed, Asia’s stock markets had just opened. Therefore, indexes in Asia’s stock exchanges, including JCI, were once stronger during the middle of second session of the trading on Thursday (12/1).

Trump delivered his speech during the trading on Thursday. However, aside of changing Obamacare policy, the speech did not reflect Trump’s intention to realize his protective policy.

The lack of descriptions on fiscal and economy programs in his speech had remained market participants of Trump’s controversial behaviors during the campaign period.

Therefore, most of Europe’s stock markets closed lower after Trump delivered his speech. This trend was followed by Asia’s stock markets, according to Reza.

Reza predicts that this trend will continue for some times. However, JCI will potentially move in positive zone, thanks to the domestic fundamentals. Frederik is still optimistic that JCI will hit the level of 6,250 if tax amnesty is successful.

Prospect of rupiah

Unlike stock exchange, rupiah appreciated amid market’s disappointments over Trump’s speech. Rupiah appreciated by 0.29% to the level of RP 13,281 per US dollar on Thursday (12/1). Meanwhile, BI or the Central Bank’s middle rate showed that rupiah appreciated by 0.29% to Rp 13.288 per US dollar.

Analyst at financial market of Bank Mandiri Rully Arya Wisnubroto said, foreign exchange market is being overshadowed with uncertainties. This was because Trump did not specify his policy in details. “Trump’s inauguration speech will unlikely describe his policy in a clear manner,” Rully said.

Some global analysts are unease over Trump’s future economic policy, mainly in terms the relations with China and domestic economic activities. The uncertainties have led the US dollar to depreciate so that rupiah appreciated.

Markets are waiting for Trump’s announcement about his cabinet. “Market participants predict that Trump’s policies will be more expansive, but not in the first year,” Rully added. Therefore, The Fed apparently will not increase its interest rate as many as predicted.

If the conditions continue, rupiah will be stronger. However, some agenda may restrict rupiah’s appreciation, such as Jakarta Gubernatorial election, as well as the process of Brexit in March.

Rully predicts that rupiah will move at the ranges of Rp 13,250-Rp 13,400 per US dollar before Trump’s inauguration. Rupiah is predicted to move around Rp 13,250-Rp 13,450 per US dollar at the end of quarter I-2017. (Muhammad Farid/Translator)