Asian Stock Market Slump Continues, Indonesian Composite Index Falls Another 2.63 Percent

The continued fall of Asian stock markets caused Indonesia Stock Exchange's Composite Stock Price Index (IHSG) to experience a significant correction of 137.71 points (2.63 percent) during the first trading session on November 14, 2016, closing at 5,094.258 from the November 11, 2016 closing. This decline was the sharpest compared to other Asian stock exchanges.

In terms of valuation, Jakarta's stock prices remain expensive compared to stocks in the regional market. According to Bloomberg data, on November 14, 2016, the price-to-earnings ratio (PER) of Jakarta's stock exchange was 23.47 times, higher than Singapore's 11.88 times, Malaysia's 17.15 times, and Hong Kong's 12.63 times. Therefore, the sharp drop in the IHSG is understandable.

Concerns over the policies of US President-elect Donald Trump, who is expected to adopt protectionist measures, and uncertainty regarding the Federal Reserve's (The Fed) decision on raising interest rates by the end of the year, led investors to offload their stock portfolios.