Market jittery on news of fresh unrest

JAKARTA (JP): The local financial market was still under pressure on Wednesday following news of fresh rioting in Sumatra and intensifying demonstrations in the country's capital, according to currency dealers and stockbrokers.

Stock prices ended slightly lower, while the rupiah booked a minor gain to close at 11,025 against the U.S. dollar.

"The market initially responded positively to President B.J. Habibie's move to investigate ex-president Soeharto's wealth, but the mood was short-lived due to fresh rioting which broke out in Bagansiapi-api (Riau) and intensified demonstrations here," a dealer with a local private bank said.

Reports said thousands of rioters stormed through Bagansiapi- api on Tuesday night, torching hundreds of homes, shops and hotels in the country's latest episode of unrest.

Currency dealers said the rupiah opened weakly at 11,200, but then strengthened to 10,800 in very thin trading thanks to dollar sales by state banks.

But in late afternoon, the currency weakened again to close the day's trading at 11,025/50, a bit stronger than Tuesday's close at 11,075.

Dealers said the rupiah was also boosted by market talks that the government might resort to capital controls to bring about lower rates and restore the domestic economy.

Stockbrokers confirmed that talks of a possible imposition of foreign exchange controls still ruled stock trading on Wednesday despite government denials of such a move.

Foreign investors mostly decided to play it safe and sold out of the market, they said.

Share prices on the Jakarta Stock Exchange (JSX) ended 0.4 percent lower on Wednesday after an 8.9 percent plunge the previous day due to wild rumors over capital controls.

The benchmark JSX Composite Index fell 1.237 points to 290.916, with 48 stocks falling and 36 rising.

Trading turnover totaled 276.7 million shares worth Rp 383.37 billion.

The research head of Trimegah Securindo Lestari, David Chang, said market sentiment remained bearish following Tuesday's panic- selling.

"The market was down again mainly because there are a lot of concerns, a lot of talk about potential capital controls," Chang said.

He said rioting in various parts of the country would have short-term negative impacts on the local market since it could provoke another massive sell-off.

If the government and the military could contain the rioting and other social unrest, Chang predicted that the stock market could technically rebound because the index level now at 290 points was just too low.

"We are saying that 290 is the support level as long as we don't see serious social unrest, looting or anything else. Technically, it should rebound because it's just too low," Chang said.

PT Telkom, the domestic phone monopoly that accounts for 17 percent of market capitalization, led the slump with a 4.4 percent fall of Rp 75 to close at Rp 1,625 -- a record low, with 43 million shares changing hands.

Other state companies also fell, except general miner PT Aneka Tambang which gained Rp 125 to Rp 1,375 on 21.2 million shares traded. Tin miner PT Tambang Timah dropped Rp 50 to Rp 3,850 on 2 million shares and cement company PT Semen Gresik fell Rp 675 to Rp 6,825 on 2.5 million shares. (rid)