Rioting pressures local bourse
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)