Global share prices and major emerging market currencies dropped on Friday, after US President Donald Trump announced import tariffs on Chinese products. Stock markets in some countries closed lower.
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ANTARA FOTO/SIGID KURNIAWAN
An employee walks past monitors displaying stock prices at Indonesia Stock Exchange (IDX) in Jakarta on Friday (23/3). The Jakarta Composite Index closed down 0.69 percent, or 43.48 points, at the level of 6,210.7 points.
JAKARTA, KOMPAS – Global share prices and major emerging market currencies dropped on Friday, after US President Donald Trump announced import tariffs on Chinese products. Stock markets in some countries closed lower.
The Jakarta Composite Stock Price Index (JCI) fell 0.69 percent to close at 6,210.7 points. Since the beginning of this year, the JCI has lost 2.28 percent. In the Asian region, Japan\'s Nikkei 225 index dropped 4.51 percent, while South Korea\'s Kospi Index and Hong Kong\'s Hang Seng Index lost 3.18 percent and 2.45 percent, respectively. The rupiah weakened to Rp 13,780 per US dollar, according to the Jakarta Interbank Spot Dollar Rate.
Stock indices around the globe, including the JCI, dropped amid fears that the trade war between the US and China would seriously affect the world economy. So far, domestic economic fundamentals and the performance of publicly listed companies remain positive.
"The fears of an open trade war between the US and China are causing uncertainty," Indonesia Stock Exchange (IDX) president director Tito Sulistio said in Jakarta on Friday.
The head of Bank Indonesia’s Financial Market Department, Nanang Hendarsyah, believes that fluctuations in exchange rates and stock prices, especially in Asian countries, are only temporary.
"This turmoil is the impact of global dynamics affecting the whole world. The impact is only temporary. BI will continue to minimize the volatility. BI invites all parties to focus on strengthening economic fundamentals and managing market risk," said Nanang.
The rupiah\'s volatility against the US dollar on a daily basis is 3.5 percent. "Meanwhile, the decrease in the JCI is still small. Foreign fund outflows reached Rp 92 billion on Friday," he said.
An economist with the Institute for Development of Economics and Finance (Indef), Bhima Yudhistira Adhinegara, said the outflow of foreign funds reached Rp 1.06 trillion last Friday. However, the net buy of domestic investors increased to Rp 1.1 trillion. This shows that domestic investors remain upbeat on Indonesia’s economic fundamentals.
"So, the US Federal Reserve\'s benchmark interest rate increase and the looming trade war have had no significant impact on investment. In a way, domestic investors see the market rationally. By raising domestic ownership, the capital market will be stronger and immune to external shocks," Bhima said.
The president director of PT Telekomunikasi Indonesia Tbk, Alex Sinaga, said the decline of the JCI index also affected Telkom\'s share value. However, he hoped a new equilibrium could be achieved.
Meanwhile, the president director of PT Bank Tabungan Negara (Persero) Tbk, Maryono, said the decline in the JCI index was nothing to worry about, although it also led to a fall in BTN’s share price.
Indonesian Chamber of Commerce and Industry (Kadin) chairman Rosan Perkasa Roeslani said the valuation of the local stock market remained quite high. The fall in local prices was caused by the decline in stock prices on global stock markets, he added.
However, Rosan believes sectors with a positive performance will help drive the JCI index higher. Based on the IDX data, the mining sector dropped 12.11 percent on Friday, eroding almost all the 14.34 percent gained recorded since January. Other sectors that have still grown since the beginning of the year include the basic and chemical industries, which rose 6.35 percent.
China ready to retaliate
The Chinese government says it is not afraid of a trade war and is prepared to retaliate against the US government’s policy to impose tariffs. Beijing is set to impose tariffs on goods originating from the US totaling about $3 billion a year.
China\'s Ministry of Commerce in Beijing on Friday published a list of US flagship products that would be subject to Chinese import tariffs of 25 percent. The products range from fresh fruit to wine.
"China does not want to engage in a trade war, but we insist, we are not afraid of the trade war," said the Ministry of Commerce of China.
Beijing\'s statement comes hours after Washington issued a tough policy on China. As previously announced, Trump signed an order related to the US position on Chinese trade practices. The order could lead to a ban on Chinese investment in the US.
Washington said the order could be the first step from a number of planned US trade policies on Beijing. The next day, Washington protested over Chinese trade practices through the World Trade Organization (WTO).
"There is a lot of theft of our intellectual property that continues to happen," Trump said.
US trade representative Robert Lighthizer has two weeks to announce the list of products subject to import tariffs. At least 1,300 products would be affected, ranging from aerospace technology and information and communication to and machinery.
