Bearish run continues on local stock market

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) fell for the fifth consecutive trading day yesterday, dragged down by heavy selling on most blue chip stocks, securities brokers said.

They said that the poor corporate results of most publicly listed companies had killed the buying appetite and most investors were instead unloading blue chips stocks such as Gudang Garam, HM Sampoerna, Astra International and Indosat.

The JSX composite index closed 1.1 percent, or 5.11 points, down to 460.13 yesterday on a total turnover of 347.31 million shares changing hands worth Rp 461.84 billion (US$57.01 million).

"There is no more positive news in the market now. Investors continue to unload the blue chip stocks they hold," a broker with BZW Niaga Securities said.

Gudang Garam's stock price shed Rp 50 to end at Rp 1,575, HM Sampoerna fell Rp 375 to Rp 5,225, Astra International closed down Rp 50 to Rp 1,575 and Indosat ended Rp 250 lower at Rp 11.700.

Securities brokers said that the lethargic trading in the local bourse was also caused by market fears that more students demonstrations would lead to street clashes with security officers in the coming days.

University students in Medan, Jakarta and several other major cities across the country continued their daily demonstrations yesterday, demanding the government lower prices and make drastic economic and political changes.

"It is too risky for foreign fund managers to put their funds in the local market given such high political instability in the country," an analyst with a local securities firm said.

The analyst said that foreign fund managers were even predicting increased street violence in the coming weeks following the government's plan to raise fuel and electricity tariffs soon by partially lifting subsidies.

"The hike in fuel and electricity prices will propel students to move into the streets," the analyst said.

"We anticipate much more bad news coming into the market in the weeks ahead," he said.

Securities analysts and brokers said that worries about the outcome of the International Monetary Fund's executive board meeting on Monday to discuss the release of the next US$3-billion tranche of the $43-billion economic reform package also cast a shadow over the Jakarta bourse.

Brokers said that despite the government's reassurances over its commitment to reform, the market was still skeptical as to whether the IMF would release the second tranche.

"We are not sure if the second tranche will be disbursed early next week,' the analyst said.

Most analysts said that the release of the $3 billion would certainly restore investor confidence in the country's capital market and prompt foreign fund managers to reenter the market.

The rupiah followed stock prices, with spot rupiah closing at 8,100 against the U.S. dollar yesterday.

Dealers said that the rupiah, however, weakened to as low as 8,250 in the morning on market response to the heated political atmosphere across the country.

"Student demonstrations will prompt offshore funds to stay away from the market," a chief dealer with a local private bank said. (aly)