Jakarta shares end lower on weak global sentiment

Rendi A. Witular and Dadan Wijaksana, The Jakarta Post, Jakarta

More profit-taking on selected blue chips brought the Jakarta Composite Index down on Monday as global market sentiment was hit by concern over the economic impact of the Madrid bombings.

The share index dropped 14.001 points, or 1.9 percent, to close at 724.15, the lowest in two months, with telecommunications firm Telkom leading the fall in blue chips. Telkom dropped Rp 500, or 6.7 percent, to Rp 6,700, accompanied by Indosat, which lost its value by Rp 350, or 2.1 percent, to close at Rp 16,650.

Monday's decline follows an earlier declining trend, which saw the Jakarta stock index drop by 4.5 percent since last Wednesday, the day before election campaigning started.

On Wednesday, the index closed at 760.32 points.

Political campaigns for the legislative election are taking place from March 11 to April 1. The election will be held on April 5, when more than 147 million voters will choose the new members of the House of Representatives.

However, BNI stock analyst Fendi Susiyanto told The Jakarta Post that the negative sentiment had been caused by the bomb attacks on Spain and its impact on the global economy, rather than by ongoing political campaigning.

"The election is no longer the primary factor. The drop was more because of panic-selling of blue chips by foreign investors, following claims by al-Qaeda that it was responsible for the attacks," Fendi said.

Unless the campaigns turned violent, he added, the political event would provide little concern in the stock market.

A powerful blast rocked Spain's capital city during the rush hour on Thursday, with official casualties reaching 200 I think it is now 201, so "just over 200" is better.

On the currency market, the rupiah, benefiting from the relatively peaceful progress of the campaigns thus far, closed slightly stronger on Monday against the U.S. dollar.

The local unit ended at 8,638 per dollar, as against 8,650 on Friday, as fears regarding possible violence during the campaign have started to subside.

Late last week, foreign market players allegedly bought the dollar on concern that campaigning could turn violent.

Turning to the stock market, Fendi said the index could drop further toward the 700 level, especially if nothing fresh boosted the market in the near future.

However, he said, the downfall would be temporary, as the index could bounce back in the longer term on favorable macroeconomic conditions, including a further fall in Bank Indonesia benchmark interest rate or good performance posted by the country's top shares.

This was quite apart from the fact that shares in Indonesian companies were still considered "cheap" as compared to those of companies of the same caliber in neighboring countries.

In Monday's trading, decliners led gainers 72 to 34 while 79 others were unchanged, with the volume traded reaching 1.14 billion shares at a total value of Rp 669 billion.

The country's top cigarette producers, Gudang Garam and Sampoerna, experienced mixed trading. While Gudang Garam fell by Rp 300 to Rp 12,000, rival Sampoerna gained Rp 50 to Rp 4,650.

Bank Mandiri, the largest lender in the country, fell 1.8 percent or Rp 25 to Rp 1,357, while Astra International, the nation's largest car maker, was also down Rp 50 at Rp 5,300.