Stock and money markets under pressure
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)