JSX composite index drops to 592 over political concerns
JSX composite index drops to 592 over political concerns
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
plunged on Monday after the General Elections Commission (KPU)
failed to approve the general election results.
The Jakarta Composite Index fell 5.3 percent or 33.11 points
in active trading to close at 592.72 from Friday's close of
625.83.
Securities analysts said many large investors sold their
stocks in fear that the KPU members failure to ratify the
election results could cause a delay in the presidential election
scheduled for November.
Allan Monangin, an analyst at Peregrine Sewu Securities local
securities company, said the fall in the index was mainly
political.
"We are facing uncertainty in the unratified elections
results," he said.
KPU failed to get the majority of its 53 members to ratify the
result of the June 7 landmark elections.
He said a lot of the panic selling was from local investors
who were surprised the predicted bad news about the uncertainty
of the election results really happened on Monday.
"A lot of local investors were selling in panic today
(Monday)," he said.
Foreign investors were more anticipative toward the uncertain
result from KPU since the beginning of this month at least, he
said.
"Foreign investors have been the net sellers since the
beginning of July," he said, adding, however, that there were a
few foreign investors who were net buyers on Monday.
The JSX Composite Index broke its important 700 barrier in
mid-June, the first time since the crisis hit the country in late
1997, on an influx of foreign funds. But local share prices
weakened in the last two weeks from the uncertainty of the
presidential election.
Allan said the positive sentiment in JSX would return by early
August when companies release their first semester financial
statements.
"Many of these companies will show they have improved
performance as they booked a foreign exchange gain from rupiah
appreciation from the end of last year," he said.
But he said positive sentiment would not last long as the
general meeting of the People's Consultative Assembly (MPR)
approaches.
The Assembly, comprising elected members of the House of
Representatives (DPR) and community appointees, is scheduled to
elect a new president and vice president in November.
Allan predicted the index would have a support level of 580
points until the meeting.
"The 580 level is very strong as a lot of blue-chip shares
have gone down badly," he added.
Adrian Rusmana, an analyst from BNI Securities, agreed that
politics played an important role in driving the JSX index down
on Friday, but added other factors also made significant
influences.
"The JSX index has gone up substantially after the June
elections, but without any fundamental improvement supporting it
so far," he said, citing that Monday's fall was the correction of
its level.
He mentioned the strengthening of the U.S. dollar was also a
decisive factor.
He also said he noticed a number of investors switching from
investing in the equity markets to buying U.S. dollars.
Asian stocks
Asian stocks lost ground on Monday with individual markets hit
by troubles ranging from a strong yen and the threat of a U.S.
rate hike to the debt-laden Daewoo conglomerate and Taiwan-China
tensions, according to Reuters.
Tokyo's benchmark Nikkei 225 average closed 0.3 percent lower
at 17,491.34, while Hong Kong's Hang Seng index shed 1.7 percent.
The Hang Seng ended below the key 13,000 support level at
12,866.52 on fears of a U.S. rate hike and worries banks would
report mounting debts in coming weeks.
The Dow Jones average closed down 0.5 percent at 10,910.96 on
Friday.
In Seoul, the Korea Composite index slumped 3.5 percent to
872.94 as fears about Daewoo Group battered market sentiment
despite government measures mapped out over the weekend to help
the chaebol restructure.
Tensions between Taiwan and China continued to weigh on share
prices in Taipei, helping to push the key stock index down 1.7
percent to 7,595.71 by the close.
Singapore's Straits Times Index closed down 2.5 percent due to
fears of a U.S. rate hike.
New Zealand's NZSE-40 Capital Index lost 0.3 percent to
2,180.49 on doubts about industrial group Fletcher Challenge's
reorganization.
Thailand's Composite SET index ended down 3.8 percent at
457.68 on worries some banks may need to raise more capital.
Weak corporate earnings forecasts pushed Philippine shares
down 2.9 percent to a one and a half month low of 2,376.12.
Kuala Lumpur's Composite index ended down 4.0 percent after
falling through the 800 point support level. (udi)