Emerging markets: Indonesia shares up again as vaccine hopes boost shares in Asia

  • Indonesia
  • Monday, 14 Sep 2020

JAKARTA, Sept 14 (Reuters): Indonesia stocks recouped more than half of last week's 4% decline on Monday after new Covid-19 restrictions in Jakarta proved less severe than feared, with stock markets across Asia buoyed by the resumption of trials for one of the leading coronavirus vaccine candidates.

South Korean stocks gained more than 1% while most regional currencies gained against a slightly weaker dollar ahead of policy readouts this week from the Bank of Japan, Bank of England and the U.S. Federal Reserve.

Details of curbs in Jakarta laid out over the weekend eased fears of further economic damage even as new daily cases in the country topped 3,000 for the sixth day running.

Bond market moves also pointed to rising expectations of more cuts in official interest rates, starting this week.

"The terms appear less strict than the market anticipated when it was first announced," Mulya Chandra, Morgan Stanley's head of research for Indonesia, said in a note. "This could drive the market to recoup last week's losses that were attributed to fear of stricter lockdown protocols."

The rupiah, which underpins one of Asia's most popular bond markets for foreign investors but has been pressured this month by fears that recommendations to overhaul Bank Indonesia (BI) will compromise its autonomy, dipped 0.1%.

Yields on three-year bonds fell 27 basis points as investors moved to price in a likely rate cut at Thursday's policy meeting, while those on 10-year bonds also dipped as concerns about growth, debt and the country's policy mix eased.

A broadly weaker US dollar should give the central bank, which has been intervening to stabilise the rupiah, more room to move to prop up domestic growth prospects without fear of weakening the currency too much, said Societe Generale's India economist Kunal Kundu.

"We expect three additional 25 basis point rate cuts each in 2020."

Taiwan's dollar was the biggest gainer among regional currencies on Monday, rising almost 1% against its US counterpart. - Reuters
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Indonesia , Shares , Rebound , Asia , Share , Market , Higher , Vaccine Hopes


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