Indonesian stocks rise after state banks' dividends

Indonesian stocks rose significantly on Wednesday, seeing their biggest increase in three weeks. This uptick followed large dividend payments from major state-owned banks, which helped attract investors back to the market. The Jakarta Composite Index climbed by as much as 3.8%. The biggest contributors to this rise were PT Bank Negara Indonesia, PT Bank Mandiri, and PT Bank Rakyat Indonesia. Together, these banks announced dividend payouts totaling 109.2 trillion rupiah, or about $6.6 billion. These moves come as part of efforts by the central bank and a new wealth fund to ease investors' worries about President Prabowo Subianto's policies. Indonesia's stock market has struggled recently, with shares down nearly 20% since September. The country's currency also hit its lowest point since the Asian financial crisis. Analysts suggested that improvements in corporate governance and higher dividend payouts were necessary to attract investors, given the weak economic growth and declining currency value. The central bank has been working to support the rupiah, which has dropped almost 3% against the dollar this year. In response, the newly created sovereign wealth fund, Danantara, has appointed notable figures as advisors to help win back investor confidence. Bank Mandiri recently approved a record-high dividend payout ratio of 78%. Other banks, like Bank Negara and Bank Rakyat, likewise increased their payout ratios compared to the previous year. This has been seen as a positive move, potentially aiding a short-term recovery in stock prices. However, foreign investment remains a concern. Global funds have sold $2 billion in Indonesian stocks this year. This outflow has further pressured the rupiah, which is the worst-performing currency in Southeast Asia. Analysts indicate that rising fiscal risks linked to the government's social programs could impact the country's economic outlook. As the Indonesian market will be closed for holidays from March 28 to April 7, traders are preparing for potential volatility upon reopening. There are also concerns about upcoming announcements from the U.S. that may affect global markets.