Market jittery on news of fresh unrest
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)