Indonesia exchange traded funds have acted as the emerging market punching bag, bearing the brunt of sell-offs during the recent bout of volatility. However, with pressure easing, Indonesian stocks are bouncing the past two days
The iShares MSCI Indonesia ETF (NYSEArca: EIDO) was up 4.6% Wednesday and the Market Vectors Indonesia ETF (NYSE: IDX) rose 3.4%. EIDO fell 8.4% and IDX plunged 7.6% Tuesday. Over the past week, EIDO declined 15.1% while IDX dropped 12.8%. [Despite Declines, Indonesia Still Not Cheap]
Speculation over a U.S.-led military response against alleged chemical attacks in Syria exacerbated weakness in emerging Asia stocks and currencies, with Indonesia on track to become the worst performer in Asian markets this year, report Vikram Subhedar for Reuters. [Indonesia ETFs Lead Global Sell-Off]
Indonesian stocks, along with other emerging markets, have been declining on speculation that the Fed would shift its accommodative policy.
Additionally, Indonesia’s markets have weakened due to a large current-account shortfall, slowing economic growth and high inflation rate. Meanwhile, the rupiah currency has depreciated 11.7% against the U.S. dollar year-to-date.