Local market jittery over new riot fears
JAKARTA (JP): High anxiety reigned in the local financial market on Friday due to rumblings of renewed rioting and weak regional sentiment.
Currency dealers said the rupiah dived to an intraday low of 12,000 against the U.S. dollar, but managed to gain a footing in late trading to end the day at 11,650 from its 11,950 opening.
The Indonesian currency gained ground in the afternoon after offshore operators sold their dollar holdings.
"It is just a common view ... people square their position ahead of the weekend on the gains they made the previous days," a chief dealer with a local private bank said.
Securities and foreign exchange analysts characterized market sentiment remained following several massive student demonstrations in recent days demanding President B.J. Habibie's resignation.
Some fear escalating political and social tensions may result in fresh riots on the scale of the unrest in May, when thousands of shops and buildings were looted and burned in the capital and other cities.
Weak regional sentiment also contributed to the bearish dealings, they said.
"Social and political uncertainty at home has determined the direction of our rupiah so far," said Robert Z. Toruan, a dealer with Bank Niaga. He stressed that stability on political and social fronts was vital for a stable rupiah-dollar exchange rate.
Robert contended that although the central bank had repeatedly intervened in the market by selling dollars for the rupiah through state banks on Friday, the move was counteracted by bulk demand by offshore operators.
"It is not effective to intervene in the market anymore as the amount of dollar selling by state banks was eaten up by large dollar buying by foreign investors."
Currency dealers said the weak rupiah was expected to trade between the 11,800 and 12,000 level next week.
Stock prices on the Jakarta Stock Exchange (JSX) also declined, with the main price index falling 3.21 points to 324.04, on a total turnover of 327.27 million shares changing hands valued at Rp 209.02 billion (US$17.04 million).
Losers were ahead of gainers 45 to 32, with 88 stocks unchanged.
Stockbrokers said listless regional markets and the plunge in the New York Stock Exchange on Thursday dragged down market sentiment in the local bourse.
"Trading activities are quiet as investors are scared to enter the equity market," an institutional sales broker with Trimegah Securindo Lestari said.
Brokers said strong buying sentiment on state-owned cementmaker PT Semen Gresik on Thursday -- after the government set the new bidding price for foreign investors -- also turned sour because most investors preferred to take profits.
"Investors took profits first as they are afraid that further social unrest might occur during the weekend," the broker said.
Semen Gresik rose Rp 325 -- after hitting an intra-day high of Rp 9,800 -- to 8,400 on 8.45 million shares traded.
Head of research of BNI Securities Adrian Lesmana told The Jakarta Post on Friday that market fears of social unrest arising from student protests had not diminished.
"Though there were no reports of student rallies on Friday, investors remained scared to enter the market," he said.
Trading was marked by the suspension of trading activities of PT Astra Graphia and PT Hanson Industri Utama due to significant increases in share prices. (aly)