Monthly Market Summary February 2025

The current account deficit is expected to be widen further considering Trump's potential tariffs on China and other countries. From the policy landscape in Indonesia, Indonesia's sovereign wealth fund, Danantara, was inaugurated last February. President Prabowo revealed a fiscal efficiency plan totaling IDR750 trillion, which will be allocated to the free nutritious meal program, covering the lack of state revenue after the cancellation of the VAT increase, fiscal stimulus, and initial funds for Danantara. 

The price of Indonesian government bonds in Rupiah denominations moved up with the 10-year bond yield falling by 12 bps to 6.91%. In line with this, the IDR denominated government bond index moved up by 1.39% in February 2025, driven by investor reaction to a more moderate tariff approach between the US and its trading partners. 

In February 2025, the decline in the JCI was mainly due to the decline in big banks such as BBRI, BMRI, BBCA. The sell-off in banks was caused by foreign investor concerns about the domestic economic landscape, especially the formation of Danantara, budget reallocation, and tight liquidity in banking due to the ambiguity of BI's policies. On the other hand, issuers DCII, MLPT, BNLI led the price increase. 

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