July 26, 2016 edition
More Economy articles in other editions
July 19, 2016 edition
July 12, 2016 edition
Manggi Habir
Ramadan is normally a month of peaceful reflection. Instead, this year's holy month witnessed the unfolding of a series of worrying events, raising further concern and uncertainties across global markets. The impact of the United Kingdom's (UK) unexpected departure from the European Union (EU), which hurt the stock market and the pound sterling, has yet to fully play itself out.
Last week, global capital markets remained under pressure and the British pound sterling continued to take a beating. Rising market anxiety was also followed by a series of deadly shootings and suicide bombings across several countries, starting from the airports in Brussels and Istanbul, the markets in Baghdad, to the holy city of Medina, a coffee shop in Dacca and finally a police station in Solo. The perpetrators are suspected to be linked or sympathetic to the Islamic State of Iraq and Syria (ISIS), which appears to be exporting its conflict abroad, as its territory in Syria and Iraq come under attack.
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July 5, 2016 edition
Financial markets around the globe are having the Brexit Blues. Britain's decision to break free from the European Union through a referendum on June 23 has wreaked havoc, evaporating trillions of dollars from investors' fund. But for Indonesia, Brexit's impact is not entirely negative. In fact, Indonesia's market has enjoyed a form of Brexit boost.
For one, it seems certain that Brexit will force the US Federal Reserve to reconsider its plans to raise its reference rate. As we know, if the Fed rate goes up, the rupiah will take a serious hit. So far, Brexit's direct impact on the rupiah has been weak. The not-so-steep-drop in the rupiah since Brexit is more due to a stronger US dollar.
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June 28, 2016 edition
The nightmare of rising market volatility has begun with the British public finally deciding to leave the European Union (EU). Last week, banks were busy preparing for the possibility of the worst scenario. With business confidence tumbling, there is a playback of past financial crises, where foreign funds in global financial markets, including emerging markets, were suddenly pulled back to their home country.
Here in Indonesia, the scenario would start with a weakening of the rupiah, followed by rising interest rates, to stem the foreign funds outflow, which inevitably halts our already slow economic growth. The nightmare gets worse with the continued weak global economy, as it negates a rapid economic recovery, as in previous financial crises. With uncertainty over the United Kingdom's (UK) access to the European market, its economy and the pound are expected to take a significant hit.
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June 21, 2016 edition
It is the destiny of financial markets to be perpetually shrouded in uncertainty. These last few weeks, this sense of ambiguity is becoming more evident. Investors worldwide are forced to continue waiting as key institutions, once again, delay critical decisions.
Tuesday night, in New York, Morgan Stanley Capital International (MSCI) Inc. sent shivering news to investors owning Chinese shares. Once again, MSCI excluded Chinese A-shares listed in mainland bourses from the MSCI Emerging Market (EM) Index. Those who are already holding long positions, expecting a massive price-hike, were caught with their pants down.
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June 14, 2016 edition