Jakarta stocks drop on unrest concern

Jakarta stocks drop on unrest concern

Bloomberg, Jakarta

Indonesian stocks fell for the first day in three on Wednesday on concern government plans to raise fuel prices later this week will spark unrest amongst the nation's poor. PT Telekomunikasi Indonesia led declines.

"There will definitely be demonstrations, creating concerns" about riots, said Bambang Setiadi, who helps manage the equivalent of US$140 million in assets at PT Sinar Mas Sekuritas in Jakarta.

Higher fuel prices mean companies "face higher costs while consumer purchasing power will decline."

The Jakarta Composite Index fell 9.75, or 0.9 percent, to close at 1,027.89.

Parliament late on Tuesday approved the government's plan to cap this year's fuel subsidies at Rp 89.2 trillion ($8.6 billion), paving the way for President Susilo Bambang Yudhoyono to raise fuel prices on Oct. 1.

Telekomunikasi, the nation's biggest telephone company, fell Rp 50, or 1 percent, to Rp 5,150. PT Kalbe Farma, the biggest drugmaker by sales, lost Rp 20, or 2.4 percent, to Rp 820. PT Ramayana Lestari Sentosa, the country's second-biggest retailer by sales, slipped Rp 20, or 2.6 percent, to Rp 760.

PT Astra International, Asia's biggest auto retailer by value, lost Rp 300, or 3.3 percent, to Rp 8,850 on concern higher fuel prices will cut demand for cars and motorcycles.

The government is allocating Rp 4.8 trillion to 15.5 million poor families to compensate them for the fuel price rise and preempt protests.

Many poor people rely on government subsidized fuel and an attempt to increase tariffs in 1998 contributed to protests that triggered the ouster of former dictator Suharto.

Subsidized gasoline sells for less than half the international price.

Still, the government needs to cut the cost of subsidies to stop a drain on the nation's finances. The Jakarta Composite Index has dropped 15 percent in dollar terms the past three months as investors fret Indonesia won't be able to afford to continue subsidizing fuel with oil prices at record levels.

Indonesia, the only member of OPEC that is a net oil importer, has seen the rupiah lose 6.8 percent of its value the last three months as the cost of crude imports increase. Oil has surged 49 percent on global markets this year.

PT Bank Danamon, the country's fifth-biggest lender by assets, slipped Rp 50, or 1.3 percent, to Rp 3,850 on concern higher interest rates will boost costs to pay depositors. PT Bank Central Asia, the second-biggest, declined Rp 75, or 2.2 percent, to Rp 3,325.

The following stocks also rose or fell in Jakarta. Stock symbols are in parentheses after company names.

PT Hexindo Adiperkasa, which sells Hitachi Construction Machinery Co's tractors and other heavy equipment, jumped Rp 60, or 5.6 percent, to Rp 1,140, its biggest gain since Aug. 30.