Indonesian mkts rise after surprise rate cut

Dhaka,  Tue,  26 September 2017
Published : 23 Aug 2017, 16:34:20

Indonesian mkts rise after surprise rate cut

Indonesian shares rose on Wednesday, heading for a second straight session of gains, after the central bank unexpectedly cut its benchmark policy rate on Tuesday to boost sluggish lending and growth.

Bank Indonesia (BI) became the second major Asian economy after India to cut its policy rate this year, bringing the 7-day reverse repurchase rate down by 25 basis points to 4.50 per cent.

 Nineteen out of 20 respondents polled by Reuters had expected BI to stand pat on rates.

Indonesia's main stock index rose as much as 0.5 per cent, led by financial and consumer staples stocks with Bank Central Asia Tbk PT and PT Bank Mandiri rising about 1 per cent each.

"Real estate and discretionary should benefit sentiment-wise, though arguably some of this has already been reflected in equity prices," Morgan Stanley said in a note. "Banks is less clear - lower rates should be good for loan growth and credit quality but that has so far failed to materialise over the past six rate cuts."

Meanwhile, other Southeast Asian stock markets traded sideways, tracking a similar movement in broader Asia shares, after having started stronger following a positive lead from Wall Street as positive tax reform comments from US House Speaker Paul Ryan spurred gains in U.S. shares.

Singapore shares were flat with United Overseas Bank  rising as much as 1.2 per cent and DBS Group Holdings gaining 0.7 per cent.

The city-state's annual cost price index data is due on Wednesday. A Reuters poll showed that the all-items consumer price index in July was expected to have risen 0.8 per cent from a year earlier.

Vietnamese shares fell as much as 0.2 per cent with consumer staples leading the decline.

Editor : A.H.M Moazzem Hossain
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