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.