JSX composite index hits four-year low
JAKARTA (JP): The Jakarta Stock Exchange (JSX) composite index, the main gauge for local share prices, nose-dived yesterday through the psychological 400-point barrier hitting a four-year low, stockbrokers said.
The Indonesian rupiah trailed the fall in the stock market and continued to drop yesterday despite market intervention by Bank Indonesia, the central bank, said currency dealers.
After falling 4.27 percent Wednesday, the JSX main composite index fell 4.7 percent yesterday, or 19.52 points, down to 396.13 points.
"It's a crash," Paribas Asia Equity head of sales Robert Allison said.
Harita Securities president Christina Lim said the market responded negatively to the announcement of Indonesia's total foreign debt of US$117 billion and of the government's commitment not to bailout, directly or indirectly, private offshore debt.
Allison, Lim and other stock analysts attributed yesterday's fall to regional sentiment, investors' lack of confidence and the downward trend of corporate earnings in the third quarter.
"Corporate earnings in the third quarter have been much poorer than people expected," Allison said.
He said downward pressure on the JSX would continue until the first quarter of next year as most people were afraid to hold onto stocks prior to the convening of the People's Consultative Assembly in March to elect a new president and vice president.
The last time the JSX main price index was that low was on August 31, 1993, when it fell to 407.30.
"Most people are apprehensive and anticipate that worse times are ahead," a stock analyst said.
In the currency market, the spot rupiah slid again yesterday to close at 3,570 against the U.S. dollar, from an opening of 3,520, despite market intervention by the central bank, dealers said.
A local bank chief dealer said the central bank intervened in the spot and swap markets several times, but failed to defend the rupiah as the demand for dollars remained high the entire day.
He estimated that the central bank had spent more than $1 billion to defend the rupiah this week.
"Rather than wasting dollars through intervention, Bank Indonesia should lend the dollars to corporations which need them to repay their foreign debts. This way, demand for dollars would weaken," he said.
Minister of Finance Mar'ie Muhammad said yesterday after attending a working session with the House of Representatives Commission VIII for state budget and finance that the drastic fall of the South Korean won was responsible for the weakening of the rupiah in the last few days.
"The Korean won is at its weakest, and this has triggered the fall of all Southeast Asian currencies. We can see that the Thai baht, which recently strengthened, is now weakening again. These factors, of course, influence the rate of the rupiah," Mar'ie said. (aly/rid)
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