Jakarta, -The government has announced the classification of goods regarding the imposition of a 12% Value Added Tax (VAT) effective January 1, 2025. The policy regarding VAT has become one of the sentiments closely monitored by market players.
As for the explanation regarding the PPN sentiment and others, you can read it on page three. Meanwhile, the schedule for the release of important data is on page four.
Indonesia’s financial market, the stock market, and the exchange rate of the rupiah experienced a decline amid the announcement of a 12% VAT imposition.
The Composite Stock Price Index (IHSG) closed down again at the end of trading on Monday (12/16/2024).The Composite Stock Price Index (IHSG) closed down 0.9% at 7,258.63. After several days of holding at the 7,300-7,400 level, the IHSG corrected back to the psychological level of 7,200.
The index transaction value reached around Rp 11 trillion, involving 22 billion shares that changed hands 1.1 million times. As many as 159 stocks rose, 442 stocks fell, and 193 stocks stagnated.
It was recorded that all sectors were in the red zone, with raw materials, non-primary consumers, energy, health, infrastructure, and transportation declining by more than 1%. Meanwhile, the property and technology sectors were the hardest hit, with corrections exceeding 2%.
Meanwhile, on the stock side, the telecommunications issuer PT Telkom Indonesia (Persero) Tbk (TLKM) was the biggest drag on the IHSG, contributing 14.9 index points. In addition, there is also the technology issuer PT GoTo Gojek Tokopedia Tbk (GOTO) which also weighed down the JCI by 11.4 index points.
Several analysts have different views on the decline of the IDX Composite today. Barra Kukuh Mamia, an economist at PT Bank Central Asia Tbk (BBCA), said the weakening of the IHSG is due to market participants waiting to see the decisions from the US central bank (The Federal Reserve/The Fed) and other central bank meetings this week, including Bank Indonesia (BI).
Barra Kukuh also highlighted profit-taking actions in the market as the year comes to an end. In addition, he also sees the impact of the announcement of the increase in Value Added Tax (VAT) to 12%.
In line with Barra, Hosiana Situmorang, an economist at Bank Danamon, said that the weakening of the JCI was influenced by profit-taking actions and a wait-and-see approach regarding the 12% VAT policy.
On the other hand, the rupiah weakened again against the United States (US) dollar at the close of trading early this week, Monday (12/16/2024). This weakening occurred amid the release of US economic data that has started to improve and show strengthening.
Quoting data from Refinitiv, at the close of trading on Monday (16/12/2024), the rupiah fell slightly by 0.03% to the level of Rp 15,995/US$.
Throughout the day, the exchange rate of the rupiah fluctuated, reaching a level of Rp16,028/US$ and peaking at Rp15,980/US$. The closing of yesterday’s trading was the lowest since August 7, 2024, previously at the position of Rp16,030/US$.
The exchange rate of the rupiah continues to weaken in line with the strengthening of the US dollar index (DXY) and the rise in the yield of the 10-year US Treasury (UST) since December 6, 2024.
According to economist Hosianna Situmorang from PT Bank Danamon Indonesia Tbk (BDMN), the depreciation of the rupiah occurred despite the market having accounted for the potential interest rate cut by the Federal Reserve (Fed rate cut).
Hosianna explained that the strengthening of the US dollar was driven by the Producer Price Index (PPI) data for the US for the period of November 2024, which was released last week. This data recorded a figure higher than market expectations.
US IHP grew by 3% year-on-year (yoy), up from 2.6% in October 2024 and exceeding market expectations of 2.6%. On a month-to-month (mtm) basis, IHP also recorded an increase of 0.4%, higher than 0.3% in October and the market prediction of 0.2%.
Ahmad Mikail, an economist at Sucor Sekuritas, added that higher-than-expected producer inflation also triggered an increase in the yield of the 10-year UST, which in turn pressured the exchange rate of the rupiah.
The yield on the 10-year UST was observed to increase significantly from 4.153% on December 6, 2024, to 4.399% on December 13, 2024, rising by almost 25 basis points (bps). This condition has attracted investors to US bonds that offer higher yields.
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