Panic selling routs JSX

Panic selling routs JSX

Rendi A. Witular, Jakarta

The Jakarta stock market sank further on Thursday for the
sixth straight session on panic selling due to a combination of
negative domestic and regional issues, offsetting the record
gains made last month.

The Jakarta Composite Index fell by 1.57 percent or 11.965
points to 746.117 with 1.52 billion shares worth Rp 1.21 trillion
(US$139 million) changing hands.

In just six trading days since it booked a historic record of
818.15 on April 27, the Index has plunged by 60.07 points or 7.3
percent.

Bluechip telecommunications firm PT Telekomunikasi Indonesia
(Telkom), the bourse's largest counter, led Thursday's disaster
by losing Rp 400 to close at Rp 7,500.

Stock analyst Fendi Susiyanto of BNI Securities said that
investors had set aside the positive news on corporate
performance, and tracked down negative sentiment on political and
security uncertainties ahead of the presidential election.

"Most foreign investors were in panic selling mode following a
string of security problems at home, such as the sectarian
clashes in Ambon, Maluku, and the recent bombing in Pekanbaru,
Riau, that killed two people," Fendi said.

Fendi explained that foreign investors, who now account for 50
percent of the average daily transaction value on the market,
were afraid that such problems would escalate ahead of the
presidential election on July 5 and the runoff on Sept. 20.

Foreign-based securities firms, such as JP Morgan and DBS
Vickers, and local firm Bhakti Capital Indonesia, were the top
sellers. JP Morgan sold Rp 218 billion worth of stocks, DBS Rp
165 billion and Bhakti Rp 108 billion.

Foreign investors mostly invest in the country's market via JP
Morgan and DBS.

Fendi also said that China's plan to scale down its investment
spending so as to cool down its overheating economy had dealt a
blow to the region, including Indonesia, which might lose its
recent export gains to China.

Indonesian exports, which are expected to emerge as a major
growth engine, have been increasingly tied to the sharp increase
in demand from China.

A slowdown in the Chinese economy, led by a sharp decline in
commodity demand and prices, would hurt Indonesia relative to its
peers in Southeast Asia.

Stock analyst and president director of Kim Eng Securities,
Mustofa, concurred with Fendi, saying that the plan by China for
a slowdown, along with the recent plan by the U.S. Federal
Reserve to gradually increase interest benchmark rates, had
further fueled the already negative sentiment.

"The Index will remain under pressure due to these problems,
and is unlikely to pick up again until after the country has
elected a new president," said Mustofa.

"We simply don't expect the Index to reach 800 again before
the presidential vote, which will ensure political and security
certainty for the market," he said.