Indonesia is considering curbs on negative research reports by foreign banks, building on its decision to punish JPMorgan for issuing a bearish call on local equities.
The finance ministry may ask global institutions which hold primary dealerships in Indonesian sovereign bonds to sign pledges to refrain from issuing research that could "destabilize" the nation's financial markets.
Indonesia's government has terminated all business partnerships with JPMorgan (NYSE:JPM) after the U.S. bank downgraded its assessment of Southeast Asia's largest economy following the election of Donald Trump.
"I don't think it will affect investor interest in Indonesia but it does reflect the difficulty of sell-side analysts... in producing balanced research reports," said Alan Richardson, an investment manager at Samsung Asset Management.
Asian markets fell again today as investors stayed edgy after a disappointing start to the U.S earnings season and fears of a Federal Reserve interest rate hike.
Japan's benchmark Nikkei 225 was down 1.1% and the Shanghai Composite tracked 0.5% lower. South Korea's Kospi managed a 0.1% gain, despite a 1% decline in Samsung (OTC:SSNLF, OTC:SSNNF). The bruised electronics multinational accounts for about 18% of the Kospi.
Militants launched a gun and bomb assault killing seven people and wounding 39 in Indonesia's capital city on Thursday, in an attack that followed a threat by Islamic State to put the country in their "spotlight."
Police suspect a suicide bomber and up to 14 gunmen to be behind the incident.
The blasts and melee sent Indonesian markets tumbling. The Jakarta Composite sunk as much as 1.7% and the rupiah fell 0.8% to 13,940 per dollar.
Indonesia's economy expanded less than analysts estimated last quarter on weak household spending, stagnating foreign investment and declining demand for the country's commodities.
GDP rose 4.73% in the three months through September from a year earlier, missing forecasts for 4.8% growth.
What about the Trans-Pacific Partnership? Last week, President Joko Widodo said Indonesia plans to join the TPP, although it still remains to be seen if the country could qualify for the deal and overcome political hurdles.
"Proactive stimulus measures and restored political stability" are cited by Credit Suisse as it upgrades Thailand to a Buy from Neutral. The team note's last week's approval of a $11B spending package (roughly 2.8% of GDP).
Valuation is a concern for Indonesia, says Credit Suisse, cutting the country to Sell from Neutral. At 14.4x forward earnings, stocks are at a 16% premium to their 10-year historical average at the same time 3-month revisions of consensus earnings have tuned south.
Indonesian officials say there are no plans to withdraw the seven-month old ban on exports of unprocessed nickel ore and bauxite.
The country was the world's top exporter of nickel ore and a major bauxite producer until this past January, when the ban was issued in order to force miners to build smelters.
Last month, the government allowed several firms producing partially processed minerals such as copper concentrate to resume exports, although Indonesia's chief economic minister Chairul Tanjung says the same rationale does not apply to unprocessed exports of nickel ore and bauxite.
"Nickel is different because if you are smelting in Indonesia the added value is much higher than copper," says Tanjung. "Because of that it's a separate issue."