US and European stocks declined, amount to achieve the lowest point translucent Rp 14,000 / US1
(BBC) - The Dow Jones had dropped to 1,000 points on Monday, 24/8 trading.
Wall Street in New York dropped for five consecutive days after the decline in stock markets in Europe and Asia as fears of slowing Chinese economy.
On the day of the trade are changing rapidly, Monday, August 24, the Dow Jones had dropped to 1,000 points before recovering at 15871.35, down 3.6%.
While the S & P 500 closed with penurunan3,9% to 1893.21 and the Nasdaq fell 3.8% by closing at 4.038.6.
The decline in US stocks driven by concerns about the health of the Chinese economy.
Factory in China
Fears of a slowdown in the Chinese economy is worse than previously thought
Two weeks ago, the Central Bank of China to take the devaluation of the yuan, which increases fears of economic slowdown in the country is worse than previously thought.
The main concern of investors are companies and countries that depend on high demand from China will be affected by the economic slowdown.
However analysts believe investors in the United States acted somewhat excessive.
"Allegations that the Chinese economy will lead the US economy into recession is unreasonable, because (the US economy) two times larger than the economies of China and based on the consumer," said Philip Blancato, chief executive at Ladenberg Thalmann Asset Management.
China is currently the largest economy of the world and also the second largest importing country, both for goods and services.
Stock market London, Paris and Frankfurt fell as concerns over China's economic slowdown continued to haunt investors.
London FTSE 100 index fell 2.6% in trading Monday morning (24/08), while the main markets in France and Germany lost nearly 3%.
Asian stocks also affected, with the Shanghai Composite in China fell 8.5%, the worst since 2007.
The Chinese government is deemed failed to calm investors.
In addition, oil prices fell to the lowest level in six years, as traders worried about slowing growth in the world's second-largest economy.
"Looks like we moved down so quickly," said David Madden, market analyst at IG.
Fears of widespread investor-related slump in Asian stocks worsened thin trading in Europe because most investors are on vacation.
"I think the uncertainty will increase in the future," said Madden.
Investors may have to wait weeks before re-entering the market traders to boost stock index.
Asian stock markets fell again on Monday (24/08) on investor concerns of slowing economic growth in China.
Nikkei 225 in Japan, which is the largest stock market in Asia, down 2.4% at 18963.53 points - its lowest level in five months.
Investors do not believe in the ability of China to stabilize the market despite the continuous efforts of Beijing.
At the weekend, China plans to allow pension funds to invest the first time in the stock market.
In the new regulation, the pension funds may invest up to a maximum of 30% of its net assets to shares listed domestically.
The move is the latest effort of the Chinese government to halt the decline of the country's stock exchanges.
The fund may invest not only in stocks but also in a series of market instruments including derivatives. With the increase demand for these products, the government hopes the price will increase.
Running out of tricks
Simon Littlewood, president of business consulting firm ACG Global told the BBC that there were concerns over the world's second largest economy "has run out of tricks because in recent months they've been trying to make their economies more fluid", but still failed to calm the markets.
In recent weeks, the Chinese joint-stock index fell 12%, so the total has decreased 30% since June.
It causes a sharp decline in sales of global stocks, with the Dow Jones in the US suffered a loss of 6%, and the FTSE 100 in the UK recorded the biggest loss in a week to reach 5% this year.
Slowing economic growth in China and the collapse of stock values is not a crisis but an adjustment "that need"
Earlier this month, China's central bank devalued the yuan as a way to boost exports.
In Australia, the S & P / ASX down 2.2% at 5098.80 on sale Monday morning.
In South Korea, the Kospi index follows the regional trend, opened 0.4% lower at 1869.13 levels.
And Monday (24/8), the stock markets in the Middle East also fell drastically.
IMF: 'No crisis'
At the weekend, the International Monetary Fund (IMF) issued a statement on global stock sales in an effort to avoid excessive panic in the market.
Slowing economic growth in China and the collapse of stock values is not a crisis but an adjustment on a "need" for the economy, a senior IMF official said on Sunday (23/8).
"It's too early to speak there is a crisis in China," said Carlo Cottarelli IMF executive director representing countries such as Italy and Greece, through a press conference.
He repeated predictions of international debtors who predicted the Chinese economy increase by 6.8%, 7.4% below the level they achieved in 2014.
On Friday (21/08), the figures showed factory activity in China in August shrank in the last six years the fastest scale.
This figure comes after official data showed China's ongoing economic slowdown. In the three months to the end of July, the country's economy to grow 7% compared to the previous year, the lowest since 2009.
The rupiah exchange rate against the dollar, which reached Rp14.050 per US $ 1 is not separated from the phenomenon of the global economy and the devaluation of the yuan, but the government should also look at the team's performance in the domestic economy.
Devaluation of the yuan, according to economist David Sumual as Bank Central Asia, resulting in structural changes (tectonic shift) in the global financial markets. Rupiah was affected by this change.
"Since two weeks ago, the global currency weakened against the US dollar all," said David told BBC Indonesia, Isyana Artharini.
From the domestic sector, is also due to the weakening of the economic issues are relatively the same, that is how government spending in order to speed up the infrastructure was built and convince investors to invest directly.
Unfortunately, efforts to make this direct investment is hampered by market sentiment is still negative towards Indonesia.
David also saw the potential of the Indonesian economy is still good, but it relies on the ability of the government to maintain food price stability and eliminate issues that disturb the stability.
"Now the price of meat rose unexpectedly, the issue sometimes want to import sometimes not, sometimes say enough supply, sometimes we say a shortage of supply. The availability of data sometimes we love ya confused, which is right," added David.
Even so, according to David, economic growth in Indonesia is still one of the highest in Asia after China, the Philippines, and India. There are other countries that experienced more severe situation of Indonesia, but the countries which undertake structural reforms, conditions are relatively better.
"India successfully undertake structural reforms so that although the currency is still weak, but not as drastic pelemahannya another currency," said David.
Cabinet reshuffle is an attempt to make the structural changes even if it takes time to see results.
On the other hand, according to David, governments and authorities should also set up an emergency plan to face the worst, especially in terms of food price stability, accelerate infrastructure spending, and reassure investors.
"It's not new suggestions, has long been requested but invisible government still needs to accelerate again," said David.
The government should also specify the steps to be taken so that the exchange rate is more stable future.
In his speech at the general session of the MPR / DPR, President Jokowi targeting Rp13.400 rupiah exchange rate against the dollar at the beginning of 2016. In response to this target, David says, this figure is still difficult to achieve because the conditions are still weak fundamentals.
"Bank Indonesia policies already exist, but what about the government?" said David.
Meanwhile, Anwar Farial currency watchers say that despite external factors which play such speculation on US interest rate hikes and the devaluation of the yuan, but the exchange rate has reached Rp14.050 should be seen as an emergency.
"This level of the rupiah has been oversold, undersell. It has no justification to mention the exchange rate is good for the economy of Indonesia. There is no more to do with fundamentals. It's been more shaken by the game of speculators. Does the fall of the stock is still going to stop or continue ? This is so the big question, "said Farial on BBC Indonesia.
Bank Indonesia must continue to make policy tight control over dollar transactions in the foreign exchange market
What happened today he thinks is hot money into Indonesia was forced to sell that stock index fell sharply, from a high of 5523 in April, 4300 to penetrate.
Rupiah obtained from the sales action is to buy dollars so that there is a high demand for the dollar and the exchange rate to penetrate Rp14.050.
In addition, although the Bank Indonesia has already implemented regulations requiring domestic transactions to use the rupiah, but the regulations have not been effective.
Then there is a dollar transactions that are not related to overseas, such as in the oil and gas industry, electricity, mining, lease malls, offices, and consulting fees that add to the demand for dollars.
Farial also praised the Bank Indonesia lowered restrictions on dollar purchases, from a maximum of US $ 100 thousand per month to a maximum of US $ 25 thousand per month in the hope of pressing demand for the dollar.
However, according to him, Bank Indonesia must continue to make policy tighter control over transactions of dollars in foreign exchange markets as well as controls through intervention by using foreign exchange reserves.
"Never considered it a regular thing that should be allowed to continue to happen," said Farial.
He hopes the government to work together with Bank Indonesia to sync between the fiscal sector, especially in removing monetary policy to boost economic growth.
'Beyond the line'
Joko Widodo President at the Presidential Palace in Bogor, Monday (24/8) said the economic slowdown not only in Indonesia but also neighboring countries.
According to him, some of the causes of economic slowdown is the depreciation of the yuan and so whether or not the planned increase in US interest rates.
"We anticipate together. They must have thought the same, and adherence to the line which we will later convey, what we have to do. Do not we already give you an outline, then there are outside the lines," he said to reporters.
Finance Minister Bambang Brodjonegoro also previously said it would prevent the flow of funds from the State Securities Certificates to encourage secondary market.
In terms of the movement of stocks and the rupiah, Bambang see it as an irrational act to seek temporary safe haven, and the US dollar is seen as the safest option.
China devalued the yuan by nearly 2% against the US dollar which is the lowest point for almost three years.
Chinese central bank devaluation reasoned taken as a correction that better reflect market forces.
According to analysts, the devaluation of the yuan would boost Chinese exports which fell sharply during the month of July.
So far the authorities to uphold the policy to keep the currency to remain strong in order to stimulate domestic demand and encourage domestic companies to borrow money and then invest abroad.
But China's latest policy, the BBC Theo Legget, are likely to come under fire from the United States. The reason for this the producers in the country claim to have suffered unfair competition from manufacturers of bamboo curtain.
Added by Legget, China's decision is likely to affect the central banks of other countries, including the United States, to raise interest rates because of cheaper goods from China may be inflation.