Stock prices fall 0.6% on political concerns
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) closed 0.6 percent lower yesterday on the back of negative sentiment following the government's announcement that fuel and power prices would be increased, stock brokers said.
Brokers said transactions remained lifeless the whole trading day, with most foreign investors staying on the sidelines for fear that the hike in fuel and power prices would only lead to extensive protests by the public in the coming days.
"The market fears that fuel price increases could only exacerbate the social and political tensions already running high in the country," a broker with Trimegah Securities said.
Minister of Mines and Energy Kuntoro Mangkusubroto announced yesterday the increase in oil product prices beginning today by between 25 percent and 71 percent as part of the government's commitment with the International Monetary Fund (IMF) reform program.
The government will also begin increasing electricity rates by an average of 20 percent in May, with additional 20 percent increases in August and November this year, the minister said.
Securities analysts said news of increases in fuel prices and electricity rates overshadowed the positive news on IMF's decision to gradually disburse its second US$3 billion tranche to the country over the next three months.
Brokers said most foreign brokerage firms like Jardine Fleming Nusantara, Merrill Lynch, ABN AMRO Hoare Govett Indonesia and Peregrine Sewu Securities made large selling orders on market concerns that the country's heated political situation could worsen in the days ahead.
Brokers said most foreign investors dumped their stocks for fear that student demonstrations would turn into extensive street violence in the coming days.
"Foreign investors have left the market as heated political tension might turn into violence," the broker said.
University students in most major cities across the country have taken part in almost daily antigovernment demonstrations, demanding the government lowers prices of basic staples and improves the country's economy.
University students have also demanded that President Soeharto step down after failing to bring the country out of its worst-hit crisis in decades.
Meanwhile, Armed Forces Commander Gen. Wiranto said yesterday that he had already ordered military commanders across the country to take stern action against "elements that cause destruction in places outside campuses".
"This signals that the government will deploy strict security control to repress student protests," an analyst from a local securities analyst said.
"Such a statement will only worsen the already low market confidence in the government," he added.
The JSX Composite Index ended 2.53 points down to 445.99 points on a total turnover of 244.79 million shares changing hands on the regular market worth Rp 255.78 billion (US$31.95 million).
The stock prices of the country's largest automaker PT Astra International shed Rp 25 to Rp 1,475, Indosat lost Rp 75 to Rp 10,925 and Bank Negara Indonesia (BNI) shed Rp 50 to Rp 425.
As stock prices declined, the rupiah in the currency market ended stable at 7,975 against the U.S. dollar yesterday, slightly up from its close of 8,100 last Friday.
Currency dealers said dealings in the currency market remained thin, with most investors watching closely the development of student demonstrations across the country. (aly)