Stock prices tumble 9.29 percent<\/p>\n
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
\ndropped for a fourth consecutive day yesterday with the main
\nprice index tumbling 9.29 percent in sluggish trading.<\/p>\n
Securities analysts attributed the share price fall to news of
\nriots and a strong possibility of the government pegging the
\nrupiah to the U.S. dollar to stabilize the country's battered
\neconomy.<\/p>\n
Fears of further riots sparked by skyrocketing prices of most
\nessential goods dampened trading activities, the analysts said.<\/p>\n
Investors also sold stock on concerns that the pegging of the
\nrupiah would result in a sharp increase in interest rates.<\/p>\n
The dominant Golkar's announcement of its nomination of State
\nMinister of Research and Technology B.J. Habibie and House
\nSpeaker Harmoko as its candidates for vice president did not help
\nthe market, they said.<\/p>\n
\"The announcement will instead send a negative sentiment to
\nthe market,\" one of them said.<\/p>\n
The JSX Composite index plunged sharply 45.32 points to close
\nat 442.28 points from 487.61 points the previous day.<\/p>\n
About 606.94 million shares changed hands on the regular
\nmarket valued at Rp 645.66 billion (US$87.25 million).<\/p>\n
\"Trading activities were sluggish for the whole day from its
\nopening. It was really a bad day,\" a broker with Trimegah
\nSecurities said.<\/p>\n
Brokers said that reports of sporadic riots in several towns
\nin the country and recent demonstrations in the capital demanding
\nlower prices of staple goods put pressure on stock prices.<\/p>\n
\"Riots and demonstrations have worried most investors in the
\nmarket. Most people were panic cut-loss selling the whole trading
\nday,\" a broker said.<\/p>\n
Stock brokers said that heated political and social conditions
\nhad heavily weighed down the market sentiment causing most stock
\nprices to drop including blue chips PT Telkom, Indosat, Tambang
\nTimah which outperformed during a sharp rally the previous day.<\/p>\n
Stock analysts said that currently market movement was largely
\ndriven by sentiment rather than fundamentals.<\/p>\n
\"All social, political and economic problems are coming in one
\ndirection causing the market to be very fragile. Your decision
\nnow has to be based on what happens in social and political
\naffairs,\" an analyst with a local securities firm said.<\/p>\n
As stock prices tumbled, the rupiah remained stable trading in
\na narrow range between 7,200 and 7,700 against the American
\ndollar on news that the government would establish a currency
\nboard system to peg the rupiah to a fixed exchange rate, currency
\ndealers said.<\/p>\n
Sport rupiah closed at 7,400\/7,600 in Jakarta against an
\nopening of 7,300\/7,500. (aly)<\/p>",
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