The Jakarta Composite Index, whose plunge has triggered trading halts several times recently, surged as much as 11% on Thursday, the best performer in the region. Asian stock benchmark was up 0.2% after soaring 5.6% on Wednesday, the biggest rally since 2008.
Still, Indonesian stocks have slumped 21% since the start of the month as virus infections keep rising.
In a bid to counter the economic fallout of the pandemic, the government moved a step closer to easing a legal cap on its budget deficit to allow a ramp-up in spending.
It is also considering issuing rupiah-denominated recovery bonds for the first time to help private companies.
“This is only a temporary technical rebound because JCI has dropped by quite a lot recently,” said RHB Sekuritas analyst Michael Wilson Setjoadi. “There are no positive domestic catalysts, with Covid-19 cases continue to rise.”
The number of confirmed Covid-19 cases in the nation rose to 790 as of Wednesday, with 58 fatalities.
The country’s number of death from the virus is the highest among its Southeast Asian peers and has raised concerns among investors on its ability to deal with the outbreak.
Indonesia is facing growth prospects that are worse than during the global financial crisis as the pandemic spreads to more regions in the archipelago, prompting authorities to impose partial lockdowns in several regions including capital Jakarta.
Winners
Markets across the region are resuming their rally after the US Senate passed a historic US$2 trillion rescue plan to respond to the economic and health crisis caused by the pandemic, putting pressure on the House to pass the bill quickly and send it to President Donald Trump for his signature.
Banks are leading the today’s rally with the gauge for financial stocks rising 14%. PT Bank Central Asia jumped 19% while PT Bank Rakyat Indonesia soared 21%.
Consumer goods producer PT Unilever Indonesia rallied 20%, all providing the biggest boost for the benchmark gauge.
The rupiah rose as much as 1.8% against US dollar to strongest since October 2015, while yield on 10-year government bonds fell 18 basis points.
Despite the strong rally, some analysts are still treating the rebound with caution as the outbreak of the disease seems far from over.
“Going forward, as the coronavirus case still rising, the volatility in the financial market will remain,” said Evan Hadiwidjaja, head of research at PT Sinarmas Sekuritas.