Rupiah fall continues to worry investors
Rupiah fall continues to worry investors
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
are likely to remain weak this week as concerns over the falling
rupiah will continue, analysts said.
The rupiah reached an historic low of Rp 3,725 against the
U.S. dollar before recouping at Rp 3,640/3,650 at Friday's close.
"I think the rupiah's continuing falls are likely to keep
market sentiment bearish ... and the rupiah will remain the key
factor affecting the stock market this week," Harita Securities
president Christina Lim said over the weekend.
Currency dealers attributed the continued decline in the
rupiah to the combination of weakening regional currencies,
pressures from foreign fund managers and the high demand for
dollars from local companies.
"High demand by the Indonesian corporate sector to purchase
dollars will continue to cast a shadow on foreign exchange
trading this week," a local bank dealer said last week.
Stock brokers said that the worsening currency trading
situation would create a bearish sentiment in local stock
trading.
"The rush for dollars caused panic selling on the Jakarta
stock bourse last week," one dealer with a local brokerage house
said.
The brokers estimated, however, that good shares would become
the target of choosy investors despite the unfavorable condition
of overall trading activities.
"But the prospects for recovery will remain thin ... if not
even worse," one broker said.
On Friday alone, the JSX Composite Index lost 21.45 points to
close at 515.45 in thin trading with 434 million shares worth Rp
481 billion changing hands.
"The market seems to have lost its direction as a direct
impact of the weakening rupiah," Lim said.
Brokers also shared Lim's view saying that most investors were
confused by the direction of trading activities in the Jakarta
bourse.
Brokers said that the fact that more banks planned to increase
their deposit rates would make the stock market even less
attractive.
"With the rise of deposit rates, most investors would find
bank deposits even more tempting," a dealer with Asian
Development Securities said.
They said that easing the government's tight crunch policy
remained the key factor to boosting stock trading.
Bank Indonesia's Governor Soedradjad Djiwandono last week said
that the government would continue to lower the interest rates of
Bank Indonesia certificates (SBIs) to improve economic liquidity.
The JSX Composite Index lost 6.26 percent last week with the
index closing 34.44 points down to 515.477.
Daily turnover declined 4.3 percent to 275.02 million shares
changing hands on the regular market last week compared to 286.94
million shares in the previous week.
Daily value also fell 15.9 percent to Rp 357.08 billion
(US$108.20 million) last week against Rp 413.91 billion recorded
in the previous week.
Securities analysts said that the main price gauge might
further go down below the 500 level in the coming weeks and would
not recover to its previous high of 740 on July 7.
"In this current situation, ...nobody can do anything," Lim
said.
Most big-capitalized stocks lost ground last week with state-
owned telecommunication falling by Rp 100 to Rp 3,450, HM
Sampoerna by Rp 1,000 to Rp 5,700, Bank Internasional Indonesia
by Rp 200 to Rp 775, Bank Negara Indonesia by Rp 100 to Rp 800
and Bank Dagang Nasional Indonesia (BDNI) by Rp 100 to Rp 600.
(aly)