Stocks down 2.4 percent but rupiah creeps higher
JAKARTA (JP): Shares prices on the Jakarta Stock Exchange (JSX) declined 2.4 percent on Friday due to bearishness in the regional market and profit taking by most investors on gains made in the last three trading days.
But the rupiah strengthened against the U.S. dollar, closing slightly firmer at 10,950 on Friday compared to Thursday's close of 10,975.
Stock analysts said the 1.9 percent drop on Wall Street on Thursday had forced most investors in the local market to dump all stocks they held in past three days.
"I think the fall in the regional and global market is responsible for the decline in the local market," said Hendra Sunarto, a chief broker with Bali Securities.
The JSX Composite Index slid 6.936 points to 275.22 on Friday on a total turnover of 308.22 million shares valued at Rp 198.45 billion (US$18.20 million).
Gainers outpaced losers 55 to 32, with 73 stocks unchanged.
Edhi S. Widjojo, head of research at Mashill Jaya Securities, attributed the fall to profit taking by most investors who had made gains on particular stocks that rallied in the past three days, following an accord on Wednesday between the government and Paris Club members of creditor nations to reschedule the country's $4.2 billion in sovereign debt.
"The stock prices fell because I see short-term investors started to take profits on the gains they made ahead of the weekend," Edhi said,
The market's euphoric response in the last two days was exaggerated, he added.
"The increase in the stock prices in the past two days was groundless given the country's poor economic situation." He said most short-term investors based their investment on sentiment rather than fundamentals.
But stock analysts and brokers shared a common view that prevailing market fears about possible instability ahead of the 33rd anniversary commemoration of an abortive coup on Sept. 30 had depleted investors' temporary buying sentiment in the local battered market.
Brokers said most blue-chip stocks, which rallied in the past three days, fell Friday. State-owned telecommunications firm PT Telkom, which accounts for 17 percent of the market capitalization, slid Rp 50 to Rp 1,725 on 12.96 million shares.
State-owned international call operator PT Indosat fell Rp 525 to Rp 5,800 on 676,000 shares, privately owned pulp and paper producer PT Tjiwi Kimia lost Rp 100 to Rp 950 on 21.414 million shares and cigarettemaker Gudang was down Rp 175 to Rp 4,575 on 1,84 million shares.
Despite the stock woes, the rupiah held its own against the U.S. dollar in moderate dealing on Friday on the back of the dollar selling for the rupiah by some state banks.
The rupiah, which opened at 11,000, rose to an intraday high of 10,800 before closing at 10,950 to end Friday's trading.
"The rupiah's improved stance was slashed by dollar demand by local corporations and banks to settle their dollar obligations by the end of the month," said Robert L. Toruan, a dealer with Bank Niaga.
He said the rupiah continued to hover around the 11,000 level over the past several days because most market participants were afraid to take any firm position amid political uncertainty.
He said the rupiah was expected to trade lower at between 11,000 to 11,500 next week due to market fear on a massive student rally ahead of Sept. 30, the date which effectively marked Soeharto's ascension to power. (aly)