Rupiah, stock prices tumble on Golkar's strong showing

JAKARTA (JP): The Indonesian rupiah and stock prices ended lower on Wednesday after rising astronomically the previous day, as the market got jittery from the strong showing of ruling Golkar party at the polls.

The rupiah slid to 7,870 against the U.S. dollar at Wednesday's trading close, from Tuesday's close of 7,650; while the Jakarta Stock Exchange (JSX) Composite Index closed down 1.4 percent or 7.977 points at 678.97.

A dealer with a local foreign exchange bank said that the rupiah opened already low at 7,720 against the dollar over the market's apprehension toward the slowness of the vote count.

The rupiah extended its losses just before close as news that Golkar surged to second place, despite results being only preliminary with a mere 5 percent of total votes counted.

"The slow vote counting has raised concerns about possible rigging. And the sudden surge of Golkar to second place made the market more wary," he said.

A huge and relatively peaceful turnout for Monday's election had boosted local financial markets, but the slow process of vote counting sent markets lower as some investors began to get cold feet.

Dealers said it was difficult to predict the direction of the rupiah. But they agreed that the fate of the local unit would be dependent on the process of vote counting and the results.

The concern of possible vote-rigging extended to the Indonesian stock market. The euphoria that pushed the benchmark index up 14 percent on Tuesday turned to distress on Wednesday.

But trading was still relatively active, with local investors taking profits, stockbrokers said.

Trading volume reached 1.48 billion shares valued at Rp 1.05 trillion. Gainers still outnumbered losers by 82 to 62, with 76 counters left unchanged.

Large-cap stocks ended mixed, with domestic telephone operator Telkom rising Rp 25 to close at Rp 5,000, international call operator Indosat down Rp 1,600 at Rp 17,100 and automotive giant Astra International falling Rp 150 at Rp 3,875.

Institutional sales broker at Trimegah Securindolestari Vonny Juwono said the market was dampened by the slowness of vote counting and an overnight fall on Wall Street.

"In addition, it was just a correction to Tuesday's excessive increase," she said.

The research head of BNI Securities, Adrian Rusmana, agreed and said that the market was overreacting on Tuesday, and moved more realistically on Wednesday by giving a fairer valuation on stocks.

He said the slow process of vote counting may affect the market in a short-term period, but its long-term outlook would remain strong.

"After this landmark election, I think Indonesia will have a new political landscape, and it is good for the market in a long- term period," he said.

A senior consultant at PT Asia Kapitalindo Securities, Herbert J. Lim, added the local benchmark index could still rise to 1000 points before year end, thanks to the strong inflow of foreign capital.

"Unlike domestic investors, foreign investors take a long-term outlook to the country's market. And I think more investors would come in because Jakarta is one of the cheapest in the world," he said. (rid)