Stocks and rupiah hurt by bombing, but slowly recover
Dadan Wijaksana, The Jakarta Post, Jakarta
Jakarta stocks and rupiah closed lower on Thursday on the back of renewed security fears stemming from the deadly bomb blast in front of the Australian Embassy.
However, both capital and currency markets managed to bounce back in the afternoon trading session to regain some ground, in what dealers attributed to a mixture of the market's resilience toward shocks and bargain-hunting actions.
The Jakarta Composite Index closed at 782.65 points, or down 0.8 percent from the previous day, but up from an intraday low of 757.28, with a total transaction of Rp 2.4 trillion.
The explosion took place at around 10.30 a.m. local time and resulted in 7 deaths and injured 161 people as of 4 p.m..
"The index's recovery was mostly led by speculators. Still, the rally showed that the market has grown a bit maturer, given particularly the fact that it was not the first time the country was hit by bomb blasts," said a stock dealer, referring to the bombings in Bali resort island and the JW Marriott Hotel in 2002 and 2003, respectively.
"We now can say the market has such a resilience that makes it able to quickly bounce back soon after a slump caused by a sudden panic," the dealer added.
In the Bali and Marriott bombings, the stock index also quickly recovered from sudden slumps.
Chairman of the Capital Market Supervisory Agency (Bapepam) Herwidayatmo told the press that he was also optimistic that the incident would not hurt the index's long-term prospect, as the nation had seen several terrorist attacks in the past and the government managed to solve the cases.
Dealers said despite the market's capability to cope with the shocks caused by the bomb blast, the incidence could add to the market's anxiety over security situations during the impending presidential election. Such an anxiety, however, will only ease out if the police are able to swiftly solve the case as they did in the investigation of the Bali bombing.
"What the market needs is signals from the authorities that they're capable of handling this and taking this case seriously with the sense of urgency.
"This is of high importance to regain investors' confidence," he said.
The rupiah also dropped to a fresh record low of Rp 9,405 per dollar in the morning, but managed to crawl back up at Rp 9,330 in the afternoon. On Wednesday, the local currency ended at Rp 9,290 a dollar.
Some traders said the rupiah climbed back on the news that the central bank was ready to support the currency, however there was no evidence that the bank was intervening the market.
On the stock market, decliners led gainers 133 to 30, while 55 stocks were unchanged.
The country's largest telecommunications firm Telkom rebounded from an intraday low of Rp 7,750, to end the session 2.5 percent down at Rp 7,950.
Indosat, the second largest, also rebounded to close unchanged at Rp 4,225.
Blue chips Bank Central Asia (BCA) and cigarette producer HM Sampoerna shares fell 2.6 percent and 1.8 percent respectively, to end the session at Rp 1,850 and Rp 5,350.