Quick Take Big Tech’s 2026 capital spending plans have blown past expectations , sparking a sharp market reaction. Investors still believe in AI — but they now want clear proof of returns , not just long-term promises. The CapEx Shock Across recent earnings, mega-cap tech companies pushed 2026 CapEx from “already massive” to “historically extreme” : Meta Platforms : US$115–135B vs US$110B consensus Stock jumped ~10% initially, but gains faded → investors want evidence, not AI rhetoric Microsoft : US$140–150B vs US$109B consensus Stock fell ~10% → ROI timing now under scrutiny Alphabet : US$175–185B vs US$115B consensus Shares slipped as markets adjusted to a more capital-intensive Google Amazon : ~US$200B vs US$146B consensus Stock dropped ~11% after-hours on cash flow concerns What Investors Are Really Worried About This is no longer about believing in AI — it’s about financial optics and timing . Key Market Fears CapEx is rising fa...
Summary
Indonesian markets came under renewed pressure after Moody's downgraded the country’s credit rating outlook to negative, amplifying concerns over policy uncertainty, governance, and capital outflows following recent market turmoil.
What Happened
Moody’s cut Indonesia’s outlook to negative from stable, while keeping the Baa2 rating unchanged
The move followed MSCI’s warning over transparency issues that had already triggered a US$80 billion market rout
Stocks and currency weakened immediately in early trade
Market Reaction
Jakarta Composite Index: -2% intraday, extending weekly losses
Rupiah: Fell to 16,880 per US dollar, near recent record lows
International bonds: Longer-dated dollar bonds slipped 0.3–0.5 cents, trading at five-month lows
Key point: Investors are demanding a higher risk premium across Indonesian assets.
Why Moody’s Is Concerned
Moody’s cited:
Reduced predictability in policymaking
Signs of weakening governance
Risks that could erode long-established policy credibility if left unaddressed
Analysts warned that the outlook cut could be a “warning shot” that may prompt other rating agencies to follow.
Government Response
Economic Minister Airlangga Hartarto downplayed the move, saying markets have yet to understand Indonesia’s new growth strategy
Financial regulators stressed that the Baa2 rating affirmation reflects solid fundamentals and financial sector resilience
Focus Turns to the Rupiah
Rupiah remains near its record low of 16,985 hit in late January
Down nearly 1% year-to-date
Markets remain sensitive to concerns over central bank independence and fiscal slippage
Selling Pressure Persists
Jakarta Composite Index is down 2.7% this week, following a 6.9% drop last week
Foreign investors sold ~US$860 million in shares since last Wednesday
Confidence remains fragile despite official promises of reform and resignations of senior market officials
Market Takeaway
Policy credibility is now the central issue
Rupiah stability will be closely watched
Failure to restore confidence could raise the risk of a full credit rating downgrade within 12–18 months
Bottom Line
Moody’s outlook cut has reinforced investor fears that policy uncertainty is becoming structural rather than temporary. Until clearer and more credible policy signals emerge, Indonesia’s stocks, bonds and currency are likely to remain under pressure.
Comments
Post a Comment