BI Rate Hike to Impact Stocks in Rate-Sensitive Sectors

Following BI’s Board of Governors’ decision to raise interest rate to 6%, rate-sensitive stocks have been negatively impacted.

Annisa Kurniasari Saumi

23 Okt 2023 - 14.43
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BI Rate Hike to Impact Stocks in Rate-Sensitive Sectors

Indonesia stock exchange. Foto BID

Bisnis, JAKARTA — Bank Indonesia’s (BI) recent decision for a rate hike to 6%, as decided during the Board of Governors Meeting last week, has had an adverse effect on rate-sensitive stocks on the exchange.

Martha Christina, Head of Investment Information at Mirae Asset Sekuritas, believes that the rate hike negatively affects several stock sectors such as technology, banking, real estate, and automotive. “In terms of stock prices, the increase becomes limited, unless companies report outstanding performance in the upcoming third quarter of 2023,” said Martha, as quoted on Sunday (22/10/2023).

She observes that even though there may be window dressing at year-end, investors need to consider what direction the Fed's policies for the coming year will take. If the Fed remains hawkish, investors may become more pessimistic about the window dressing’s effect.

Several rate-sensitive sector indices have recorded declines year-to-date. The technology sector has seen the deepest decline, weakening by 23.49% since the beginning of the year. Similarly, the property sector has decreased by 2.47%, and the financial sector is down 4.13% (ytd).

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BI Rate Hike to Impact Stocks in Rate-Sensitive Sectors

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