Indonesian stocks and country-specific exchange traded funds bounced back Tuesday after President Joko Widodo unveiled a series of new economic stimulus measures, the second package this month, to help bolster the economy.
On Tuesday, the iShares MSCI Indonesia ETF (NYSEArca: EIDO) rose 3.9% and Market Vectors Indonesia Index ETF (NYSEArca: IDX) gained 3.0%, recovering off both of their all-time lows Monday. Year-to-date, EIDO plunged 38.7% and IDX plummeted 37.5%.
Among the new measures unveiled are plans to fast-track big investments in industrial economic zones and tax incentives to encourage exporters to keep foreign currency earnings at home, the Financial Times reports.
“We are making (investing in Indonesia) as attractive as possible,” Chief Economics Minister Darmin Nasution said, according to Rappler. “We must fix, simplify, make it cheaper.”
This is the second stimulus measure in three weeks after worries over a China slowdown and prospects of a U.S. rate hike weigh on the emerging markets.
Moreover, the rupiah currency has depreciated over 15% against the U.S. dollar this year while the economy is expected to slow to less than 5% this year, its slowest rate of expansion in six years.
The first stimulus package earlier this month was implemented shortly after Widodo shifted around his cabinet to bring experienced policymakers into economic positions. However, observers believed that the first round was not enough to bolster the economy and rupiah, but the second shot looks promising.
“This is quite a good move from the government,” Josua Pardede, an economist from Indonesia’s Bank Permata, told Rappler. “But the market hopes the government can do more to build confidence for portfolio investment and to boost slumping domestic consumption.”
iShares MSCI Indonesia ETF
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Max Chen contributed to this article.