Global equity markets were boosted by the Fed’s recent rate cut. The U.S. Central Bank reduced its policy rate by 50 basis points to 5.00%, a move that is seen as favourable in steering the U.S. economy toward a soft landing rather than a recession. While the U.S. economy is slowing down, the situation is not considered alarming. Positive developments also emerged from China, where the People’s Bank of China (PBoC) introduced several economic stimulants, including cuts to benchmark interest rates, mortgage rates, and property down payment requirements. In addition, PBoC has provided loans to investors for share buybacks, adding to the positive growth sentiment for the global economy, including Indonesia.

In Indonesia, with the stabilizing inflation and appreciated exchange rate Rupiah, Bank Indonesia took accommodative action by lowering 25 bps BI Rate to push the economy amidst weaker PMI Manufacturing in the last two months. This early action by BI is expected to enhance the resilience of the domestic economy.

The Jakarta Composite Index (JCI) hit a record high in September 2024, nearing 8,000 before foreign investors engaged in profit-taking. Global investors are now rotating to China’s equity market due to PBoC’s substantial economic stimulus. We anticipate several positive domestic catalysts through the end of the year, such as the new government and local elections, which could boost optimism. The correction at the end of September 2024 offers a good entry point for risk-on investors seeking growth opportunities beyond the U.S. market. Overall, we remain optimistic about Indonesia’s domestic economic prospects, supported by favorable global conditions.