Jakarta market dormant on lingering uncertainties
JAKARTA (JP): The Indonesian financial markets remained sluggish yesterday with the rupiah barely moving and the stock market ending slightly higher on a lack of incentives and worries over political uncertainties.
Currency dealers said the rupiah touched a day low of 15,200 in early afternoon trading following news reports that the political situation in East Timor was on the boil.
"East Timor has become a hotspot again, with all news wires filing extensive reports about demonstrations and instability there. The market is quite nervous," a dealer with a local private bank said.
The rupiah ended at 14,800 on the Jakarta market, little changed from Friday's close of 14,700.
"Nothing, but intervention, can spur the rupiah. In this very thin market, even $10 million can move the market significantly," the dealer said.
"So, if the central bank can use some of the US$1 billion of IMF money for intervention, I'm sure it will take the rupiah to the 10,000 level in a very short time, provided there are no negative developments on the political front."
Last week, the government signed the second supplementary memorandum of economic and financial policies with the International Monetary Fund (IMF).
Under the new deal, the government and the IMF projected that the rupiah would settle by the end of the year at 10,000 to the dollar.
The deal was a prerequisite for the IMF to disburse $1 billion in a balance of payment support loan to Indonesia. The $1 billion is part of the $43 billion bailout arranged by the IMF to help salvage the country's battered economy.
The stalled rupiah made stock trading on the Jakarta Stock Exchange (JSX) lethargic the whole day, stockbrokers said.
Stock prices made a very slight gain of 0.08 percent, with the JSX Composite Index closing 0.361 points higher at 431.231. Turnover totaled 189.17 million shares valued at Rp 130.32 billion (US$8.5 million).
A broker with a local brokerage said the market was still trading thinly with even large-cap stocks like state telecommunications firm PT Telkom trading modestly.
Telkom stayed unchanged to close at Rp 4,050.
Bahana Securities' associate director and head of equity sales Andre Cita said the market was pretty flat because most foreign investors were watching from afar due to a lack of good news here.
"I think they're going to be sidelined for a while until we get more positive news. Right now, it's pretty neutral, not much bad news except for developments in East Timor," Cita said.
It was reported at least one person was killed and five were wounded in East Timor yesterday when Indonesian security forces clashed with protesters demanding independence for the troubled territory.
The protest was held in the town of Baucau after three European ambassadors arrived there as part of a review of the political situation in the province.
Cita said there were lingering concerns over East Timor which could drag down the market in the next few weeks because any negative developments in the country's youngest province could frighten away investors.
He warned that political instability could stall everything, including the implementation of the reform program agreed with the IMF.
"We hope everything will go smoothly. But even if everything goes right, it is still difficult for the country and for the citizens," Cita said.
It needs a bit of positive news to fuel the market, which is heavily burdened with a lot of uncertainties, he said. (rid)