Bi Rate Influence On Stock Essay

763 words - 3 pages

BI Rate Influence on Stock PriceIndonesian Economic Casefor 2008-2013Introduction• Bank Indonesia rate plays an important role in monetary policy, mainly to control inflation and the Rupiah exchange rate.• BI rate becomes a reference for bank interest rates• This is the reason, a lot of studies that examine the effect of BI rate on Indonesian stock price.JKSE (IHSG)Stock Exchange were classified into nine sectors according to the type on industry:A. Primary Sectors (Extractive)• Sector 1 : Agriculture• Sector 2 : MiningB. Secondary Sectors (Manufacture)• Sector 3 : Basic Industry and Chemical• Sector 4 : Various Industry• Sector 5 : Consumer Goods IndustryC. Tersier Sectors (Service Industry / Non-manufacture)• Sector 6 : Property and Real Estate• Sector 7 : Transportation and Infrastructure• Sector 8 : Financial• Sector 9 : Trade, Service and InvestmentTransmission of Monetary Policy• BI rate affect time deposit rate and bank credit interest.• BI rate may also affect the exchange rate.• The change of BI rate affect the macro economy through the shift in asset prices• The impact of changes in interest rates on economic activity also affects public expectations of inflationBI Rate 2008-2013BI Rate Vs JKSE (1)BI Rate Vs JKSE (2)Phase of BI Rate Increase in 2008• 4 Dec 2008 : 9.25%• 7 Oct 2008 : 9.50%• 4 Sept 2008 :9.25%• 5 Aug 2008 :9.00%• 3 July 2008 :8.75%• 5 June 2008 :8.50%• 6 May 2008 :8.25%• 6 Dec 2007 :8.00%The Fall of JKSE (IHSG) in 2008• JKSE sharp decline has occurred on October 6, 2008 up to 183.768 points or 10.03% into the level of 1,648.739. JKSE was the most severe in Asia.• The shares of sixth Bakrie Group were suspended on October 7, 2008.• In October 8, 2008 JKSE fell 10.38 percent to the level of 1,451.669. JKSE was in the lowest position at the level of 1,111.390 in October 28, 2008.BI Rate ( 8-9 Oct 2008)Affected Sectors (1)Affected Sectors (2)Affected Sectors (3)Phase of 2009 - Jun e 2013Th e Improving of JKSE• On the early 2009 to mid 2013 the stock price continue to bullish.• The s tock market investor s also welcomed the action of BI, when they cut the BI rate by 50 basis points to 8.25% on February 4, 2009.•...

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