Jakarta stocks end lower on profit taking, oil price

Jakarta stocks end lower on profit taking, oil price

The Jakarta Post, Jakarta

Profit taking and concern over the rising price of oil have
pulled down Jakarta stocks for the second consecutive day, wiping
out gains from the euphoria of a peaceful presidential election
earlier this week.

The Jakarta Composite Index ended 0.18 percent or 1.468 points
lower on Thursday at 816.762 on volume of 2.28 billion shares
worth Rp 1.17 trillion. Thanks to bargain hunting in second-liner
shares, the Index was off its intraday low of 811.751.

Stock analyst Arwani Pranadjaja of Mandiri Securities said the
decline was primarily caused by profit taking in several
bluechips, which had already been overbought by investors buoyed
by the trouble-free election.

"The Index has soared too fast, and it is normal for investors
to go out for profit taking," said Arwani, but added that there
was still the possibility the index would increase to 830 next
week due to positive fundamentals.

In five trading days from Sept. 14 until Sept. 21, the Index
jumped by 1.7 percent or 14 basis points.

President director of the Jakarta Stock Exchange (JSX) Erry
Firmansyah has recently warned that the sharp increase in the
Index was not good because once it declined, the drop would
certainly be steep.

Meanwhile, stock analyst Hendra Bujang of Mega Akses
Securities attributed the Index decline primarily to concern over
the soaring price of oil, which might trigger higher inflation
and production costs for the corporate sector.

"There is concern that the higher oil price will trim profits
of companies, and this is not good for investors," said Hendra.

The price of crude oil jumped back to US$48 a barrel on
Thursday.

Both Arwani and Hendra dismissed speculation that the latest
market decline was triggered by concerns over the effectiveness
of Susilo Bambang Yudhoyono, who is expected to win the
presidential election, in carrying out his executive role.

Susilo is likely to face stiff opposition from members of the
House of Representatives when trying to issue policies or make
laws, given the fact that a majority of the legislators are
included in the "national coalition", formed to support President
Megawati Soekarnoputri in the recent election.

Hendra said the market was not concerned with this problem,
since the coalition itself was currently facing internal
conflict, giving room for its members to ignore instructions
already issued by their parties.

"I don't think such a problem will dent investor confidence.
We are more concerned with the forming of the new Cabinet. The
economic ministers should be those already accepted by the
market," said Hendra.

Elsewhere, the rupiah closed higher against the U.S. dollar
due mostly on intervention by the central bank after companies
heavily bought the unit to pay maturing overseas debts and
speculation by several banks.

The rupiah ended higher at Rp 9,140 from Rp 9,165 on
Wednesday.

"The rupiah has surged from its intraday low of about Rp
9,250, due to demand from the corporate sector and speculation.
The unit managed to get stronger thanks to the central bank
intervention," said Arwani.