Indonesia ETFs Lead Global Sell-Off
August 27th at 10:38am by John Spence
ETFs tracking Indonesia were the steepest decliners in Tuesday’s global equity sell-off triggered by fears the U.S. could take military action against Syria.
Market Vectors Indonesia Small-Cap (NYSEArca: IDXJ) was the worst-performing unleveraged ETF on Tuesday morning with a loss of 8% at one point.
Market Vectors Indonesia Index ETF (NYSEArca: IDX) and iShares MSCI Indonesia (NYSEArca: EIDO) were both off more than 5%. EIDO is down over 40% from its 52-week high. [Indonesia ETF in Five-Day Crash as Volume Spikes]
The Bank of Indonesia on Tuesday said it will convene an additional monthly board of governors’ meeting on Thursday. An evaluation of latest monetary, economic and banking conditions will be discussed at the supplementary meeting, it said.
Indonesian ETFs have been hit by inflation worries, a widening current account deficit and expectations the Federal Reserve will taper its bond purchases. Tuesday’s global risk-off bout was particularly tough on emerging market ETFs.
Other ETFs indexed to Southeast Asian stocks also sold off Tuesday amid fears over potential U.S. military action against Syria. The iShares MSCI Philippines (NYSEArca: EPHE) was down 6.2% while iShares MSCI Thailand (NYSEArca: THD) fell 3.6% and Market Vectors Vietnam (NYSEArca: VNM) shed 2.1%.
“The selling reflected the weakness in regional peers on Monday when the Philippine market was shut for a public holiday, uncertainty over when the U.S. Federal Reserve would taper its monetary stimulus and weak economic data making the region vulnerable to capital outflows,” The Star Online reports.
“It’s still the same concerns about the upcoming possible tapering of the Fed and then regionally we’re seeing weakness from our Asian neighbors,” said April Lee-Tan, research head at COL Financial in Manila, in the article.
iShares MSCI Indonesia
The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.