Stock prices tumble 9.29 percent
Stock prices tumble 9.29 percent
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
dropped for a fourth consecutive day yesterday with the main
price index tumbling 9.29 percent in sluggish trading.
Securities analysts attributed the share price fall to news of
riots and a strong possibility of the government pegging the
rupiah to the U.S. dollar to stabilize the country's battered
economy.
Fears of further riots sparked by skyrocketing prices of most
essential goods dampened trading activities, the analysts said.
Investors also sold stock on concerns that the pegging of the
rupiah would result in a sharp increase in interest rates.
The dominant Golkar's announcement of its nomination of State
Minister of Research and Technology B.J. Habibie and House
Speaker Harmoko as its candidates for vice president did not help
the market, they said.
"The announcement will instead send a negative sentiment to
the market," one of them said.
The JSX Composite index plunged sharply 45.32 points to close
at 442.28 points from 487.61 points the previous day.
About 606.94 million shares changed hands on the regular
market valued at Rp 645.66 billion (US$87.25 million).
"Trading activities were sluggish for the whole day from its
opening. It was really a bad day," a broker with Trimegah
Securities said.
Brokers said that reports of sporadic riots in several towns
in the country and recent demonstrations in the capital demanding
lower prices of staple goods put pressure on stock prices.
"Riots and demonstrations have worried most investors in the
market. Most people were panic cut-loss selling the whole trading
day," a broker said.
Stock brokers said that heated political and social conditions
had heavily weighed down the market sentiment causing most stock
prices to drop including blue chips PT Telkom, Indosat, Tambang
Timah which outperformed during a sharp rally the previous day.
Stock analysts said that currently market movement was largely
driven by sentiment rather than fundamentals.
"All social, political and economic problems are coming in one
direction causing the market to be very fragile. Your decision
now has to be based on what happens in social and political
affairs," an analyst with a local securities firm said.
As stock prices tumbled, the rupiah remained stable trading in
a narrow range between 7,200 and 7,700 against the American
dollar on news that the government would establish a currency
board system to peg the rupiah to a fixed exchange rate, currency
dealers said.
Sport rupiah closed at 7,400/7,600 in Jakarta against an
opening of 7,300/7,500. (aly)