Profit-taking spree pulls down local share prices 7.7 percent
Profit-taking spree pulls down local share prices 7.7 percent
JAKARTA (JP): Share prices in the local stock market tumbled
7.7 percent on Wednesday as massive profit-taking hit most blue
chip stocks, dealers said.
The dealers said that besides profit taking, many investors
also sold shares to follow the downward trend in regional
markets.
"I think the buying spree is over. Investors have started to
carefully review their asset allocations here," Edhi Widjojo, an
analyst with Mashill Jaya Securities said.
Stockbrokers also attributed the sharp decline in stock prices
to a combination of political and social instability at home and
a switch to other attractive emerging markets by foreign fund
managers.
"But on top that, there is no reason for share prices to
continue their winning streak given the country's dire economic
and political situation," another analyst said.
The local stock market had shown signs of a recovery in the
last few days after foreign investors reentered the fray.
The Jakarta Stock Exchange (JSX) main price gauge fell 7.7
percent (32.69 points), falling back past the key 400-point level
to 387.38 on a turnover of 632.5 million shares worth Rp 400
billion.
Losers led gainers by 143 to 8 with shares in 43 companies
remaining unchanged.
Vonny Juwono, an institutional sales broker with Trimegah
Securindolestari said that some foreign investors had still shown
an interest in the local market, despite the fall in stock
prices.
"Some foreign brokerage firms still placed more buying orders
than selling orders," she said, pointing out that Credit Lyonnais
Capital Indonesia, ING Barings Securities, Vickers Ballas Tamara
and Danareksa Securities were all net buyers on the day.
She also said that other foreign brokerage firms including ABN
Amro and Merrill Lynch Indonesia had made huge buying orders over
the past few days, despite continued student demonstrations.
News reports said that around 1,500 students took to the
streets on Wednesday to press on with their demands that former
President Soeharto be brought to court to face charges of
corruption and human rights abuse during his 32-years in power.
Vonny said that unlike in previous weeks where stock prices
had been largely unaffected by demonstrations, protests in the
coming days would be likely to dampen market sentiment.
"Foreign investors remain concerned about the country's
political situation," Edhi said.
Unlike stock prices, the rupiah closed firmer against the U.S.
dollar at 7,475 on Wednesday, compared to Tuesday's close of
7,600. The rise came on the back of limited central bank
intervention and a strong Japanese yen, currency dealers said.
Dealers said the rupiah remained almost unchanged after very
thin trading on Wednesday because most market participants were
reluctant to build new positions.
"Most people wanted to square their positions and will now
take a wait and see attitude," a chief dealer with a local
private bank said.
Bank Indonesia Governor Sjahril Sabirin said on Wednesday that
the rupiah still had the potential to advance to the 6,500 level
against the American dollar in the coming days because the rate
of inflation had shown further signs of slowing down. (aly)