Stock prices down 3% on IMF concerns
Stock prices down 3% on IMF concerns
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
failed to sustain early gains yesterday as heavy selling hit the
market before the close of trading.
The JSX Composite Index dropped 3 percent to close at 502.91
from 518.68 the previous day, with 483.93 million shares worth Rp
606.95 billion (US$64.22 million) changing hands.
Stockbrokers and analysts attributed the decline in stock
prices to intensifying concerns that the International Monetary
Fund (IMF) might postpone the disbursement of its second tranche
of aid from its multi-billion-dollar bailout package to
Indonesia.
"I think this is the main single reason for stock prices to
come off yesterday," director of equities of Bahana Securities
Bruce Rolph told The Jakarta Post.
He said most foreign investors were worried about the possible
delay of the loan disbursement, prompting them to take profits on
gains they made on big capitalized stocks over previous days.
Most foreign brokerage houses like Jardine Fleming Nusantara,
Merrill Lynch, ING Barings, Indosuez WICarr and Credit Lyonnais,
which made large purchasing orders over the two previous days,
were net sellers yesterday.
Selling pressure also hit cigarette stocks on news that
cigarette producers would raise their prices. Cigarette maker HM
Sampoerna's shares slid Rp 800 to Rp 5,825 on a total volume of
2.54 million shares, while Gudang Garam fell Rp 1,725 to Rp
12,000 on a total volume of 8.88 million shares yesterday.
Official warnings by the U.S. that America would advise the
IMF to withhold its $3 billion second tranche disbursement for
Indonesia killed bullish market sentiments in the local market,
the analysts said.
"If this really happens in the coming days, Indonesia will run
into deep trouble to heal its paralyzed economy," an analyst with
a joint-venture securities firm said.
Deputy Treasury Secretary Lawrence Summers testified before a
Senate foreign affairs subcommittee as the IMF debated whether or
not to release its next disbursement in aid for Indonesia this
month.
The IMF is currently reviewing Indonesia's compliance with
reforms it agreed to in exchange for a $43 billion aid package.
IMF officials will make a decision by March 15.
The analysts also said that despite the stable political
situation during the General Session of the People's Consultative
Assembly, most foreign and local investors were still reluctant
to make any significant investment decisions in the local market
until the Assembly finishes its duties, including electing a
president and vice president, on March 11.
Edhy Widjoyo, an analyst at Mashill Jaya Securities, said most
investors were still waiting for the outcome of the General
Session.
As stock prices fell, the rupiah ended weaker against the U.S.
dollar as demand by overseas operators, local foreign banks and
joint-venture banks remained high yesterday, currency dealers
said.
They said the rupiah closed at 9,450 against its opening of
9,300/9,400 in the morning after touching a day high of 9,250
before the lunch break.
The rupiah closed at 8,950 the previous day.
"Most investors were concerned over the possible delay of the
second tranche loan disbursement for Indonesia," a chief
treasurer of a joint-venture bank said, pointing out that the
central bank might guard the rupiah from falling under the 10,000
level. (aly)