The Jakarta Composite Index rebounded from a sharp decline in early trade to post a solid gain on Wednesday, outperforming most regional markets, while the rupiah capped five quarters of advances against the dollar.
The JCI gained 20.31 points, or 0.7 percent, to close at 2,913.68. Some 2.9 billion shares worth Rp 2.64 trillion ($290 million) changed hands. Gainers outnumbered decliners by 132 to 66.
The MSCI Asia-Pacific Index of regional shares dropped for a second day. Hong Kong’s Hang Seng index fell 0.59 percent and Japan’s benchmark Nikkei 225 dropped 1.96 percent. This followed declines of about 3 percent in the major US indexes on Tuesday.
The JCI traded as low as 2,844, a decline of 1.7 percent from the previous close, before selective buying in banking and mining shares drove the benchmark to a gain.
Among market leaders, PT Bank Central Asia gained 2.6 percent, while PT Bank Mandiri, the nation’s biggest lender by assets, advanced 1.7 percent.
PT Adaro Energy, the country’s No. 2 coal producer, gained 1.percent, while PT Bumi Resources, the sector leader, rose 0.5 percent.
Meanwhile, the rupiah edged higher on Wednesday, trading at 9,068 against the dollar as of 3:42 p.m., marking its longest run of quarterly gains in at least 18 years, as Indonesia’s improving economy spurred demand for the nation’s stocks and bonds.
“The rupiah has held up despite the turmoil in the global markets,” said Ho Woei Chen, a regional economist at United Overseas Bank in Singapore. “The economy is resilient as it is mostly domestic demand driven. Even during the global financial crisis last year, there weren’t any sharp drops in GDP, unlike other countries in Asia.”
The rupiah rose 0.3 percent during the second quarter, extending this year’s advance to 3.6 percent. Overseas investors have bought $871 million more Indonesian stocks than they sold this year, helping drive the JCI 15 percent higher.
Funds based abroad increased holdings of Indonesian debt by 46 percent to Rp 158.3 trillion this year as of June 24, according to the Finance Ministry’s Web site. The nation’s stocks and local-currency bonds lead gains in Asia’s 10 biggest economies this year.