Stock prices, rupiah fall on political concern

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) lost nearly one percent and the rupiah fell further, closing at Rp 9,300 to the U.S. dollar, as anti-government protests continued yesterday.

Stockbrokers said that activity on the JSX remained lethargic for the whole trading day, with most investors sidelining the market.

"The country's worsening political situation is prompting most foreign investors to stay out of the market," a broker with BZW Niaga Securities said.

Brokers said that students demonstrations, which in recent days have resulted in violent clashes between protesters and security officers, had scared away investors.

University students have staged concerted demonstrations over the past few weeks demanding President Soeharto's resignation and concerted efforts to lift the country out of crisis.

Head of sales at Usaha Bersama Sekuritas, Surya Martara, said the failure of talks held in Tokyo over the weekend to resolve problems surrounding the country's US$68 billion private sector overseas debt was also to blame for the sluggish market.

The JSX Composite index closed at 430.53 yesterday, 0.9 percent (4.12 points) down on Friday, with a total turnover of 257.85 million shares valued at Rp 275.75 billion (US$30.63 million).

Most brokers said stock prices of certain blue chip stocks and politically-well connected stocks like Bimantara Citra, owned by President Soeharto's second son Bambang Trihatmojo, and Citra Marga Nusaphala Persada (CMNP), controlled by President Soeharto's eldest daughter Siti Hardijanti Rukmana, fell on fears that the country's political situation could worsen.

Adding to the country's political woes, higher interest rates in the banking system had caused most investors to place funds in time deposits, which currently offered higher yields, brokers said.

"The local bourse is facing trouble on two fronts -- the political woes and high interest rates," the broker from BZW Niaga Securities said.

The rupiah followed the stock market's downward trajectory in response to the worsening political atmosphere in the country, currency dealers said.

They said the rupiah, which opened trading at around Rp 9,250 against the U.S. dollar, closed the day on Rp 9,300 after moderate dealing. Most investors were wary of entering the fray. (aly)