Market drops over fear Susilo may lose
Rendi A. Witular, Jakarta
The Jakarta stock market fell on Thursday, with some analysts saying an key factor was fears "market favorite" Susilo Bambang Yudhoyono might fail to win the president's job.
The Jakarta Composite Index ended lower by 1.54 percent or 11.92 points, to 759.742, on volume of 1.72 billion shares traded worth Rp 908.78 billion (US$101 million).
Stock analyst Fendi A. Susiyanto of BNI Securities said the decline was attributable to profit-taking by investors following concerns Susilo might lose the runoff on Sept. 20 to incumbent President Megawati Soekarnoputri or Wiranto.
"Political jitters are one of several key factors that caused the profit taking. Susilo has been perceived as market-friendly not only because of his economic programs but also because of his relatively clean record," Fendi said.
Fendi said the decline came following fears of a possible coalition between political heavyweights the Golkar Party and the Indonesian Democratic Party of Struggle (PDI-P) to support Susilo's competitor in the second round of voting in September.
Golkar and the PDI-P are the two largest factions in the House of Representatives and their respective candidates, Wiranto and Megawati, are fighting it out for second place to contest Susilo in September. As vote counting continues, Susilo's ongoing 6 to 8 percent lead over the other candidates means he is almost assured of a place in the runoff.
Dealers also said the failure of Susilo to win a majority of the vote in the first round, which would have ruled out the need for a runoff, had prolonged the political uncertainty in the country.
Aside from political concerns, Fendi said the market had experienced a technical correction as a result of consecutive gains in the market during the past several days, which caused several bluechip stocks to become overvalued.
Shares of state telecommunication firm PT Telkom were down Rp 200 to Rp 7,650; cigarette producer PT Gudang Garam declined by RP 750 to Rp 14,200; its rival PT HM Sampoerna dropped by Rp 100 to Rp 5,550; and automotive kingpin PT Astra International closed lower by Rp 200 to Rp 5,650.
Other stock analysts blamed the decline in the stock market on the recent slight increase in Bank Indonesia's benchmark interest rate to 7.37 percent from 7.34 percent, which prompted several investors to convert their stock portfolios into Bank Indonesia SBI promissory notes.
"But in the long-term, the bourse will remain firm," said a broker with a foreign-based securities firm.
The analysts recommended investors kept shares of mining and agricultural companies in their long-term portfolios, following the surge of several mining and agricultural commodities in the international market, such as nickel, tin, copper, coal, crude palm oil and rubber.
Analysts said the bourse's fundamentals would remain strong, with an expected supporting level at 750 and a resistance level of 786.
On the currency front, the rupiah closed at Rp 9,000 against the U.S. dollar, up slightly from Rp 9,005 on Wednesday.