JSX shares fall four percent on profit taking

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) fell four percent Friday on profit taking after three consecutive days of gains, stockbrokers said.

In the foreign exchange market, the rupiah slid to close at 8,000 against the U.S. dollar from 7,950 on Thursday, currency dealers said.

Stockbrokers and analysts said the sharp decline in stock prices was sparked by profit-taking on large-cap stocks and declines on regional share markets.

The research head at Vickers Ballas Tamara, Noraya Soewarno, said the rise in stock prices in the last three days was extraordinary and required a correction.

"You cannot expect share prices to extend gains for much longer. They have shot up too high. It is time for correction," Noraya said.

"Besides, some regional markets were also down today following an overnight slide on Wall Street."

The JSX Composite Index, the main gauge for local stock prices, closed down 18.446 points, or 4 percent, at 439.494 after a 7.2 percent rise on Thursday.

Trading volume totaled 277.4 million shares valued at Rp 370.6 billion.

Losers beat gainers by 60 to 23 with 88 stocks unchanged.

Leading the losers, state-owned domestic call operator PT Telkom lost Rp 250 to close at Rp 3,475 on 25.4 million shares traded. Cigarette maker PT Gudang Garam, another big-cap stock, also fell Rp 975 at Rp 12,300 on 1.3 million shares.

Falls in blue chips led individual investors to dump second- line stocks, brokers said.

Noraya predicted that the market would remain volatile for short periods, with short-term foreign funds playing the decisive role.

She predicted that short-term foreign capital would remain in the country for the near term, benefiting from the improving economic indicators like the slowing inflation rate and the stabilizing rupiah.

Those improving indicators would help some publicly-listed companies, especially those with sound fundamentals but which have been suffering from the fall of the rupiah.

Stockbrokers and analysts, however, warned that concerns over domestic social instability and the mixed regional equity picture would continue to discourage long-term capital from reentering the market.

Thousands of rioters hurled stones at police stations and looted shops Friday in Karawang, West Java. One person was reportedly killed and scores of others injured in the incident.

The fresh rioting, however, did not affect the local foreign exchange market significantly.

Despite the rioting, dealers said, trading on the dollar- rupiah remained thin on Friday, with only a few foreign operators entering the market.

The rupiah ended Jakarta trading at 7,980/8,020.

A dealer with a local private bank said state banks were seen buying dollars on Friday, probably to finance imports of basic commodities ahead of the Muslim Idul Fitri festival.

He said the market was again very thin as most operators preferred to keep their position squared.

"Most of us have squared our position. If we buy or sell dollars, it is for our customers' needs."

"In this time of uncertainties, foreign operators do not dare to take any position any more, nor do we local players. The risk is unforeseeable now."

He predicted that the rupiah would stay at around 8,000 until Idul Fitri as many local players would go on holiday during the festival. (rid)