Ambon violence puts stocks under pressure
The Jakarta Post, Jakarta
Bargain-hunters led a sell-off in selected blue-chip shares on the Jakarta Stock Exchange on Monday, sparked in part by fresh violence in Maluku province, causing the index to fall by 0.45 percent.
The Jakarta Stock Composite Index closed at 811.75, 3.69 points lower than the previous day's closing. Volume was 1.11 billion shares valued at Rp 752.28 billion (US$87 million).
Sectarian clashes in Ambon, the capital of Maluku, broke out on Sunday, leading to numerous deaths, though the situation had improved by Monday. The clashes were the worst since a peace deal was signed in February 2002 to end three years of clashes that left thousands of people dead.
"The Ambon violence affected market sentiment. It became the trigger of a correction, which we had actually anticipated following last week's hectic run," a trader with a top state bank said.
On Friday, the index ended a roller-coaster week to close at its highest level ever, prompting anticipation of a technical correction as investors cashed in their gains.
Dealers said the bullish sentiment last week was largely caused by hopes of gains by top companies, most of which were unveiling their first-quarter results, and optimism over the nation's political landscape after the unveiling of Susilo Bambang Yudhoyono and Yusuf Kalla as an official pairing for the upcoming presidential election.
However, with the violence in Ambon, the index's progress could stall, depending on how quick the government can restore order in the area, the trader said, while adding that Monday's decline was still "tolerable".
The violence in Ambon flared when a group of people tried to raise the flag of the South Maluku Republic (RMS) -- a failed independence movement that was founded in 1950.
Shares in cigarette producer Sampoerna dropped by Rp 300 to Rp 5,100, while Gudang Garam shed Rp 50 at Rp 14,600.
Meanwhile, the rupiah closed unchanged on a relatively quite trading day. The rupiah ended flat at 8,620 against the U.S. dollar, recovering from an intraday low of 8,630.