Stock prices lose ground as rupiah weakens
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) fell by 2.6 percent yesterday on heavy selling in some blue chip stocks as the rupiah weakened slightly, stockbrokers and currency dealers said.
Stockbrokers said that the main price gauge closed 11.69 points lower to 437.94 yesterday with a total turnover of 420 million shares worth Rp 349.5 billion (US$102.79 million) changing hands on the regular market.
They said that yesterday's trading was marked with the suspension of trading in Bank Danamon shares at the JSX due to an increase in share prices by almost 30 percent.
"Bank Danamon was suspended yesterday at 15:13 hours because its price had increased by almost 30 percent," one broker with a local securities firm said.
The broker said that many investors rushed to buy Bank Danamon shares on wildly-speculated talk that the bank would be taken over by some Indonesian conglomerates.
"The rush caused the bank's stock price to increase to Rp 650 per share yesterday until it was halted automatically by the JSX management," a broker said.
The JSX management said that the bank's stock trading would be resumed today.
Asian Development Securities business director Naotaka Ikeda said that most investors, especially domestic ones, were easily influenced by market rumors because there was not any positive incentive in the market.
He said there were market rumors that Bank Danamon was in a negotiation with privately-run Bank Central Asia (BCA) to purchase a certain stake in Bank Danamon.
"It was this rumor that pushed the price of Bank Danamon to increase sharply yesterday," Naotaka said.
Another broker said that the country's largest automaker, Astra International, was also under selling pressure on market speculation that timber tycoon Prajogo Pangestu would sell his equity stake in Astra to other companies due to his financial problems.
"The market speculated that Prajogo Pangestu, who owns 50 percent of the closed Bank Andromeda, was facing a liquidity problem and would likely sell his stake in Astra," a broker said.
Bank Andromeda, along with 15 other insolvent banks, was closed by the government on Nov. 1 as part of the reform package which is supported by US$23 billion in standby loans from the International Monetary Fund, the World Bank, the Asian Development Bank and other sources.
"Most investors are out of the market. Trading was largely driven by rumors," Naotaka said.
An analyst with Harita Securities said that the stock prices in the JSX had been very cheap after they had fallen by almost 40 percent since early July.
"The JSX price has not bottomed out yet. But now is the best time for investors to buy stocks because they have been very cheap," she said.
As stock prices lost ground, the rupiah weakened slightly in late trading yesterday despite earlier intervention by the central bank, currency dealers said.
Dealers said they had been skeptical that the intervention would be successful because of the sustained strong demand from corporations for dollars.
"The rupiah failed to sustain early gains as corporate demand for dollars remained strong," Reuters quoted one foreign bank dealer as saying yesterday.
Spot rupiah was quoted at 3,400/3,430 against the American dollar compared to an opening of 3,395/3,405 in the morning session.
The intervention, the amount of which was described by dealers as "moderate", had helped strengthen the rupiah and stop it from breaching the psychological barrier of 3,400 in early trading.
They said the central bank was believed to have intervened in the market after the rupiah had earlier fallen to 3,415 against the dollar.
Bank Indonesia sold dollars all the way down from 3,400 to 3,355 in early trading. Dealers said they did not detect any further intervention in late trading. (aly)
Market, currency -- Page 11