S&P Upgrades Indonesia's Rating, IHSG Jumps 2 Percent

Stock prices on the Indonesia Stock Exchange (IDX) surged after Standard & Poor's (S&P) Global Ratings upgraded Indonesia's foreign currency sovereign credit rating to investment grade. On Friday, May 19, 2017, the Jakarta Composite Index (JCI) closed up 146.43 points (2.59 percent) to a new high of 5,791.88. This was the highest increase among other Asian stock exchanges. The rise in stock prices pushed the market capitalization of the Jakarta Stock Exchange to Rp 6.31 quadrillion.

Leading stocks that supported the index's rise at the end of the week included PT Telkom (TLKM), up 5.1 percent; Bank Mandiri (BMRI), up 6.2 percent; Bank BCA (BBCA), up 2.9 percent; Astra International (ASII), up 2.9 percent; and Bank BRI (BBRI), up 2.8 percent. Among small-cap stocks, the biggest gains were seen in Ever Shine Textile (ESTI), surging 34.9 percent; Eka Sari Lorena (LRNA), up 43.2 percent; Bintang Mitra Semestaraya (BMSR), up 31.5 percent; Victoria Investama (VICO), up 23.1 percent; and Wicaksana Overseas (WICO), up 21.8 percent.

S&P finally raised Indonesia's sovereign credit rating to investment grade, BBB-, from the previous BB+. This upgrade is based on the Indonesian government's effective management of its budget, both in terms of revenue and expenditure. This follows Moody's Investor Services and Fitch Ratings, two other international rating agencies that had previously upgraded Indonesia to investment grade.