Stocks fall on Ambon, weak global markets
The Jakarta Post, Jakarta
The Jakarta stock index tumbled by 2.31 percent on Friday due to negative sentiment created by uncertainty over the domestic political and security situation, and declines in a number of benchmark stock markets.
The Jakarta Composite Index ended down 18.554 points at 783.413 on a trading volume of 1.83 billion shares worth Rp 1.07 trillion (US$124 million).
Stock analyst David Ferdinandus of CIMB securities said the decline was undoubtedly driven by the recent sectarian clashes in Ambon, the capital of Maluku province, and jitters over the security situation during the upcoming presidential election.
"Investors are concerned that the recent unrest in Ambon is being orchestrated by certain parties to worsen the country's security situation ahead of the presidential election. That is why foreign investors have decided to pull out of the market and take what gains they have already made," said David.
He explained that many investors trading on a short-term basis had decided to leave the market after the Index hit their target of 800 points.
Excessive sell-offs in selected bluechips, notably those of telecommunication firms, cigarette companies and banks, pushed the index lower.
Telecommunications company PT Telekomunikasi Indonesia (Telkom) was down by Rp 350 at Rp 8,050 and its rival PT Indonesian Satellite also lost ground, ending Rp 200 lower at Rp 3,975.
Cigarette firm PT Gudang Garam dropped by Rp 350 to Rp 14,600, while automaker PT Astra International declined by Rp 100 to Rp 5,700.
Bank Central Asia shed Rp 75 to close at Rp 3,900, state-owned Bank Mandiri declined by Rp 50 to Rp 1,450 and Bank Rakyat Indonesia lost Rp 100 to close at Rp 1,725.
Aside from local negative sentiment, drops in several benchmark stock markets due to possible interest rate hikes in China and the United States also weighed on the market, David said.
After a market holiday on Thursday, Japan's Nikkei closed 2 percent lower at 11,761.79, tracking a fall on Wall Street after U.S. growth data showed strong inflationary pressures in the first quarter.
Taiwan shares also closed down by 4.4 percent at 6117.81.
David said the market was likely to trade in a range of between 770 and 804 next week.
The rupiah ended steady against the U.S. dollar on Friday to close at Rp 8,700, unchanged from its close on Thursday, as rumored intervention by Bank Indonesia managed to curb the dollar's rise, which was sparked by a sharp drop in the local stock market, dealers said.
Dow Jones quoted dealers as saying that offshore investors bought dollars as they unloaded Indonesian stocks.
Bank Indonesia is suspected to have sold dollars when the greenback was trading at around Rp 8,700.
Bank Indonesia's deputy governor Aslim Tadjuddin said the central bank was always ready to intervene to help the rupiah if necessary. He did not, however, specifically confirm that it had sold dollars on Friday.
Dealers said market players had also bought the U.S. currency ahead of the long weekend here. The local currency market will be closed Monday because of a Muslim holiday.