Markets unimpressed by budget draft
Markets unimpressed by budget draft
The 2005 state budget draft unveiled by President Megawati Soekarnoputri failed to lift sentiment in the stock market, which remains anxious about soaring oil prices.
Dealers said that many investors considered the budget overly optimistic.
The Jakarta Stock Exchange composite index ended down 3.970 points, or 0.5 percent, at 751.950 on Monday. Decliners led gainers 66 to 29, with 82 stocks unchanged. Volume was 357 million shares valued at Rp 317 billion.
"We had many negative factors," said a trader with Kuo Capital Securities as quoted by Dow Jones.
The negative factors include rising political uncertainty ahead of the September 20 presidential election, soaring oil prices which have depressed stock markets around the world and the possibility of Bank Indonesia raising its benchmark interest rate amid stronger inflationary pressure and to help defend the rupiah.
Dealers said that investors would continue to sell bank shares on worries that a higher interest rate would lower their earnings.
Bank Danamon fell by Rp 75, or 2 percent, to Rp 3,450 and Bank Central Asia (BCA) was down Rp 25, or 1.4 percent, to Rp 1,800.
Dealers said they expected the market on Wednesday to trade lower on further selling in select blue chips. The Indonesian markets were closed on Tuesday for Independence Day celebrations.
Meanwhile, the rupiah closed lower for the second straight session as local companies purchased dollars to meet their month- end obligations.
The dollar ended at Rp 9,280, weaker than its close of Rp 9,265 on Friday.
Dealers also attributed the rupiah's fall to the dollar's rise against its major rivals and surging oil prices.
Higher oil prices will likely boost dollar demand from state oil and gas company PT Pertamina, one of the main dollar buyers in the local foreign exchange market, dealers said. Pertamina needs dollars to pay for its oil imports.
"The underlying sentiment for the rupiah will remain bearish ahead of the presidential runoff in September," said a trader at a foreign bank.
Dealers expect the dollar to trade between 9,250 and 9,325 Wednesday. -- JP