Rate fear drags down local share prices<\/p>\n
JAKARTA (JP): Fears of a further increase in interest rates
\ndragged down share prices on the Jakarta Stock Exchange (JSX)
\nMonday.<\/p>\n
Brokers said that most investors were now waiting for another
\nincrease in SBI rates as last week's increase had failed to prop
\nup the battered rupiah.<\/p>\n
\"There are no substantial trading transactions on the local
\nbourse ahead of the holiday as people are anticipating another
\npossible interest rate hike,\" the managing director of Harita
\nSecurities, Christina Lim, said.<\/p>\n
The financial markets were closed yesterday in observance of
\nIslamic New Year.<\/p>\n
Brokers said many investors sold their bluechip stocks, such
\nas Astra International, Gudang Garam, Indosat and Bank Negara
\nIndonesia (BNI).<\/p>\n
\"The sales of such big cap stocks undermined the buying mood,\"
\none of the brokers said.<\/p>\n
The stock price of the country's largest automaker, Astra
\nInternational, shed Rp 25 to close at Rp 1,725 on 4.74 millions
\nshares traded, Indosat fell Rp 175 to Rp 12,400 on 239,000 shares
\nchanging hands, Gudang Garam tumbled Rp 500 to Rp 10,400 on
\n851,000 shares traded and BNI fell 25 to Rp 500 on 3.75 million
\nshares traded.<\/p>\n
The JSX Composite index closed down 4.84 points to 485.64
\npoints on a total turnover of 405.97 million shares changing
\nhands on the regular market worth Rp 523.86 billion (US$64.23
\nmillion).<\/p>\n
Concerns about another breach in the IMF-brokered reform
\nprogram and fears that spreading student demonstrations would
\ncause instability also added to the gloomy market outlook, the
\nbroker said.<\/p>\n
The head of equities at Bahana Securities, Bruce Rolph, said
\nmost foreign investors sensed that Indonesia was not showing any
\nserious intention to fully implement the IMF-arranged reform
\npackage.<\/p>\n
He said irregularities in the clove monopoly and the crude
\npalm oil (CPO) regulations negatively affected foreign investors'
\nsentiment about the local market prompting them to continue
\nstaying on the sidelines.<\/p>\n
\"Most investors stayed away from the market because they see
\nthat Indonesia is not serious about the implementation of the
\npackage.<\/p>\n
\"Implementing the reform is more important than signing it.\"<\/p>\n
Under the IMF-brokered $43 billion bailout package, for
\nexample, Indonesia is obliged to dismantle the clove monopoly
\ngiven to the Clove Marketing and Buffer Stock Agency (BPPC) by
\nJune.<\/p>\n
But reports said another company, PT Kembang Cengkeh Nasional
\n(KCN), also controlled by President Soeharto's youngest son
\nHutomo \"Tommy\" Mandala Putra, had been established to take on
\nBPPC's monopoly of the clove trade, the main ingredient of many
\nlocally produced cigarettes.<\/p>\n
\"This move shows that the country is not serious about the
\nIMF,\" Rolph said.<\/p>\n
\"Any small sign of backsliding in the IMF reform package will
\nbe bad for the country.\"<\/p>\n
He said such bad news might force the IMF to cancel the $3
\nbillion second tranche of financial aid to Jakarta.<\/p>\n
Mirroring the stock prices' decline, the rupiah closed
\nmarginally lower in moderate trading ahead of the holiday.<\/p>\n
\"The market was quiet with no investors seen in the market
\nMonday,\" a dealer with a local private bank said.<\/p>\n
He said that spot rupiah closed at 8,150 Monday against the
\nU.S. dollar compared to its Friday close of 7,950. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rate-fear-drags-down-local-share-prices-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}