OJK recalls the “terrible effect” of the banks, the big four collapse

Jakarta, CNBC Indonesia – Shares of four giant banks (the big four) was seen falling again in trading session I Wednesday (11/1/2023) and has again weighed down the Composite Stock Price Index (IHSG).

Until 10:00 WIB, bank the big four observed to be correct by more than 2%.

Here are the bank transactions the big four about the trading session I today.

Source: RTI

This time, shares of PT Bank Negara Indonesia Tbk (BBNI) led the correction, which fell 2.87% to Rp 8,475/unit. Meanwhile, PT Bank Mandiri Tbk (BMRI) shares were in second place, dropping 2.43% to Rp 9,050/unit.

Meanwhile, PT Bank Central Asia Tbk (BBCA) shares fell 1.53% to Rp8,050/unit and PT Bank Rakyat Indonesia Tbk (BBRI) shares fell 0.9% to Rp4,390/unit.

In fact, all four shares of the bank the big four This too weighed on JCI today. BMRI shares again became the biggest drag, reaching 9.53 index points. Meanwhile, BBCA, BBNI and BBRI shares weighed on the index by 8.97 index points, 5.22 index points and 4.966 index points respectively.

Bank shares the big four again languishing along with the attitude of the major central bank which is at a standstill falcon. The central bank of the United States (USA), the Federal Reserve (The Fed), has declared its commitment to fight inflation and expects higher interest rates to remain in place until further progress is made and no clear evidence will have been recorded in the economic data.

From within the country, the Financial Services Authority (OJK) is warning the banking sector of the challenges ahead, scarring effects.

“Several risks that banks need to watch out for include the scarring effect of the COVID-19 pandemic, rising bond yields, potential depreciation of the rupee and declining liquidity,” said Dian Ediana Rae, chief executive officer of OJK’s banking supervision, in a written statement, Wednesday (11/1).

Previously, Fed Chairman Jerome Powell said in a speech yesterday that the central bank is firmly committed to reducing inflation, despite the potential to cut economic growth and trigger pressure from politicians.

“Price stability is the main cushion for a healthy economy and allows society to reap countless benefits over time,” Powell said, in his Riskbank conference speech on Tuesday, quoted by CNBC International.

Powell added that the Fed’s efforts to fight inflation could have a negative impact on US economic growth.

“Restoring price stability when inflation is high requires efforts that may become unpopular in the near future because they could slow down the economy,” he added.

Not only Powell, but several Fed officials expect the same. San Francisco Fed chair Mary Daly and Atlanta Fed chair Raphael Bostic stressed in comments on Monday that interest rates need to climb above 5% and stay there for some time. The Fed’s key interest rate currently fluctuates between 4.25% and 4.5%.

According to the CME Group’s FedWatch toolkit, the market now sees the Fed raise interest rates by 25 basis points each in February and March, peaking at 4.75% – 5%.

The probability of a 25 basis point hike in February is 75% and 65.9% in March.

With US economic data already showing signs of a slowdown, market participants see an opportunity for the Fed to cut interest rates faster.

The FedWatch tool shows that interest rates could be cut at the end of 2023.

This is certainly different from the projections provided by the Fed last December. The world’s most powerful central bank previously indicated it would hike interest rates two more times, 50 basis points in February and 25 basis points a month ago, to 5% – 5.25%.

The Fed also previously said interest rates would not be cut until 2024.

Furthermore, this weakening has also been exacerbated by foreign investors who have been noted to be diligent in issuing shares big cap RI, incl the big four. Since the beginning of this year, foreign investors have recorded net sales of Rp 2.34 trillion across all markets. BBCA and BBRI shares are the two most traded by foreigners.

Data citation Refinitvdue to poor performance since the beginning of the year, cumulative total market capitalization the big four recorded a decline of IDR 161.55 trillion, with BBRI recording the largest decrease in capitalization of IDR 76.52 trillion.

CNBC INDONESIA RESEARCH TEAM

Disclaimer: This news item is not intended to encourage readers to buy or sell related stocks. The investment decision is entirely up to you and CNBC Indonesia is not responsible for any losses or profits resulting from this decision.

[Gambas:Video CNBC]