Rioting pressures local bourse
JAKARTA (JP): Trading on the Jakarta Stock Exchange resumes Monday after one week off, but analysts predict that share prices will be under heavy pressure this week following fresh outbreaks of rioting in Ambon, Maluku, and various parts of the country.
Securities analysts said fears of the rioting in Ambon spreading to other areas in the province of Maluku would discourage foreign investors from entering the battered local market and likely force the remaining foreign fund managers here to discharge their stock holdings.
"It is our security problems that will affect foreign investor sentiment in the local market," the head of research at Panin Sekuritas, Anton Karlam, said on Saturday.
Foreign fund managers, who have shunned the country's financial market due to the unresolved economic and financial catastrophe, would not be tempted to reenter the local market again until they see some clear signs of recovery in all sectors especially on the economic and political fronts.
"I think the market will remain volatile in the short term due to fresh riots at home," research director of BNI Securities Adrian Rusmana said.
News reports indicated that riot-torn Maluku was still tense on Saturday following bloody communal clashes which had caused a death toll of at least 50 people.
The rioting, which erupted early last week, had also left scores of people injured and almost 100 homes and several churches and mosques torched, making it the worst single outbreak of violence in the country since the May rioting in Jakarta last year which led the downfall of former president Soeharto.
Adrian said offshore fund managers' perspectives on the country's investment climate have totally changed to negative due to the financial and political fiascoes.
"Indonesia is not the right investment spot at this point in time and all they want to do is to escape the country," Adrian said.
He said fears following the devaluation of Brazil's currency, the real, which had set off global financial woes, would still incite massive selloffs in emerging markets, including the beleaguered local bourse.
In addition, there are no fresh leads in the market which could encourage local retail investors to buy stocks.
"Market sentiment has not improved as there is no single positive item of news to support it," BNI's Adrian said.
An institutional sales broker with Trimegah Securindolestari, Vonny Juwono, said trading activities in the local market, which had dwindled prior to the long holiday, would be marked by persistent selloffs by most investors due to the country's complex problems.
"We do not expect too much as investors are still wary of our market," she said.
The Jakarta Stock Exchange Composite Index, the main gauge for local share prices, fell 8.4 percent to 402.40 points in the week prior to the week-long Ramadhan holiday.
Daily average turnover stood at around 279.5 million shares changing hands, at an average daily transaction value of Rp 416.87 billion.
Aside from the stock market, analysts also have a bleak outlook on the rupiah, which dived to break the 9,000 level to the dollar on Friday.
Currency dealers said the rupiah would not improve this week due to possible fresh attacks by offshore operators and renewed dollar demand by local commercial banks.
"I think sentiment on the rupiah will still be bearish next week," a chief dealer with a joint venture bank said on Saturday.
He said talk of a possible street rally by university students and new political parties this week would cast shadows across the currency.
"Some people will use those planned demonstrations as an excuse to speculate on the rupiah," the dealer noted. (aly)