Stock, rupiah down on instability fears
Stock, rupiah down on instability fears
Rendi A. Witular, The Jakarta Post, Jakarta
After a week-long rally triggered by relatively trouble-free
legislative elections, the Jakarta stock market plunged on Monday
on fears of political instability following news that several
politicians may reject the general election results.
The Jakarta Composite Index, which comprises 388 firms, ended
lower by 11.805 points, or 1.5 percent, to 767.812, compared with
last week's close.
The index rose 4 percent throughout last week until Thursday.
The market was closed on Friday due to the Easter holiday.
Telecommunications and banking blue chips led the decliners.
Shares of state-owned telecommunications company PT
Telekomunikasi Indonesia (Telkom) fell by Rp 200 to Rp 7,800 on
profit-taking, after sharply rising by 16 percent last week.
Telkom is the largest counter on the Jakarta Stock Exchange.
Its rival, PT Indonesian Satellite Corp. (Indosat) also dipped
by Rp 100 to Rp 4,200 after surging 15 percent last week.
Blue-chip Bank Mandiri, the country's largest lender in terms
of assets, ended down by Rp 25 to Rp 1,425. The drop was tailed
by other banking blue chips, such as Bank Central Asia (BCA),
which ended lower by Rp 75 to Rp 3,675, and Bank Rakyat Indonesia
(BRI), which dropped by Rp 25 to Rp 1,675.
Stock analyst Fendi Susiyanto from BNI Securities said that
fear of political uncertainty had further fueled the already
fragile stock market, which was overheated by a sharp increase
last week on positive sentiment after a peaceful general
election.
"The index is already fragile with profit-taking, as several
blue chips have already been overbought. The possibility that
several political parties may reject the poll result has
exacerbated losses on the stock market," said Fendi.
He explained that investors were afraid that the political row
could lead to further security instability, since the parties
could mobilize their supporters nationwide for a mass rejection.
Citing endemic vote-rigging, 19 of the 24 political parties
contesting this year's legislative election rejected on Saturday
the April 5 poll tally and demanded the General Elections
Commission (KPU) call for a reelection.
The rejection, which has been criticized by analysts and the
other five parties, is spearheaded by former president
Abdurrahman "Gus Dur" Wahid, who is now an adviser to the
National Awakening Party (PKB).
Fendi said the index would consolidate this week within the
range 742 to 772, before rising to a psychologically important
level above 772.
Regarding the drop in several banking blue chips, Fendi said
that was mainly caused by the overbuying of bank shares, rather
than by the central bank's recent move in shutting down Bank
Asiatic and Bank Dagang Bali.
"The closure sent a positive sign to the banking sector, to
comply with prudent banking practices. Such a move was needed to
improve the local banking industry," he said.
Concerns at potential political uncertainty also hit the
rupiah, pulling the currency down to Rp 8,595 against the U.S.
dollar on Monday, from Rp 8,575 on Thursday.