Stock and money markets under pressure

JAKARTA (JP): Pressure remained on equity and foreign exchange markets yesterday after Minister/State Secretary Moerdiono confirmed that President Soeharto would leave for Europe on Sunday for a medical check-up.

Foreign exchange dealers said the rupiah price, which fell on Thursday, continued to fall against the U.S. dollar yesterday reflecting concern about the President's health.

The Jakarta Stock Exchange (JSX) composite index tumbled 13.56 points to close at 575.05 after heavy selling by foreign investors.

"The Indonesian currency is likely to remain weak until his (Soeharto's) return and details of his health are unveiled," a foreign exchange dealer said.

The rupiah opened in a range between 2,342 and 2,344 against the dollar. It recovered slightly just after opening to 2,336/38.

But in the afternoon the rupiah dropped to 2,340/42 as investors reacted to Moerdiono's statement on the President's planned European medical check-up.

The rupiah plunged by 17 points on the spot market on Thursday closing at 2,343/44 following rumors about the President's health.

A dealer at Bank Bali said panic selling of the rupiah had ceased: "The selling pressure is there, but it is generally slowing down. Not like Thursday. The money market players are not so frantic today."

A Bank Indonesia official said that frantic rupiah trading was under control, and its value against the green back was safe.

"The rise in the U.S. dollar against the rupiah is still far below the upper-line of the central bank's intervention band," he said.

The official acknowledged there was a small rush for the dollar but that demand for it was still tolerable.

Bank Indonesia's intervention band was set at 2,322 and 2,440, yesterday, while the official rupiah-dollar rate was at 2,322 and 2,368.

The rupiah's lowest value at 2,344 on Thursday was far below the intervention band's 2,440 upper line, an indication that supply for the dollar in the interbank money market was still enough to meet demand.

Several stock analysts confirmed that concern for Soeharto's health triggered the 2.3 percent JSX price loss.

"I would say there was no other reason for such a sharp decline today other than concern about Soeharto's health. We actually had expected a decrease, but not as deep as what just happened today," a dealer from PT Peregrine Sewu told The Jakarta Post yesterday.

The JSX composite index tumbled 13.56 points to close at 575.05 after a 574 low at midday, bringing the market's loss to 3.1 percent over the last two days.

"Based on securities companies' transaction figures, I think foreign investors are net sellers today," the dealer said.

"I think most of the foreign selling pressure this morning came from American investors. Local investors just followed their move," Deni Ryadi from PT Asian Development Securities told the Post.

"They were so worried, because they might have received uncertain information about Soeharto's health," he said.

"Rumors on Soeharto's health were already in the market yesterday, but the situation worsened today because there was another rumor that Soeharto will not only undergo a medical check-up but also bypass surgery," another dealer said.

"It might be different if it's only a medical check-up. But this is something more frightening."

A senior analyst with a London-based securities company said that he didn't see any rush by foreign investors: "I don't have an exact figure, but I would say sale transactions are dominated by domestic investors."

PT Bimantara Citra, controlled by Soeharto's son Bambang Trihatmodjo, shares dropped Rp 150 (6.41 U.S. cents) yesterday, with 4.8 million shares changing hands.

A day earlier, Bimantara lost Rp 100, with a trading volume of 1.9 million shares.

PT Citra Marga, controlled by Soeharto's eldest daughter Siti Hardiyanti Rukmana, lost Rp 125, with 1.9 million shares changing hands.

Among the big companies that were down at yesterday's close included PT Telkom, which decreased Rp 100 (with 2.7 million shares changing hands); Indosat, down by Rp 350 (350,000 shares); Indocement, by Rp 175 (631,000 shares); Barito, by Rp 25 (1.8 million shares); Gudang Garam, by Rp 500 (832,000 shares); HM Sampoerna, by Rp 200 (577,000 shares); Indah Kiat, Rp 100 (2.2 million shares); and Semen Gresik, by Rp 350 (959,000).

PT Multi Bintang Indonesia, a foreign joint venture, plunged 25 percent (or Rp 2,400) to close at Rp 9,600.

Analysts predict that Soeharto's health would remain the key issue driving the market next week. (hen/alo)