Stocks lose ground but rupiah hits 8,800

JAKARTA (JP): Share prices on the local market lost their footing on Wednesday as most investors cashed in gains they had made in the last five days but the rupiah continued to gather steam, hitting an intraday high of 8,725 against the U.S. dollar.

Stockbrokers said that bearish sentiment in regional markets coupled with investors' persistent worries over the country's bleak economic outlook and political uncertainty curbed investors' buying sentiments on Wednesday.

"But on top of that, profit-taking is the dominant factor behind the decline of the stock market," institutional sales manager of Mashill Jaya Securities Antonio Yongnata said.

Stockbrokers said that foreign and domestic investors placed large selling orders on stocks that had rallied in the past few days, especially on telecommunications and mining firms

Foreign brokerage firms like Merrill Lynch Indonesia, ING Barings Securities and GK Goh Ometraco Securities were net sellers, brokers said.

The Jakarta Stock Exchange (JSX) Composite Index fell 3.44 percent or 10.79 points to 303.19 on a total turnover of 177.02 million shares changing hands valued at Rp 205.62 billion (US$23.10 million).

Losers outpaced gainers 65 to 21 with 78 shares unchanged.

PT Telkom slid Rp 150 to close at Rp 1,850 on 24.53 million shares traded, Indosat shed Rp 675 to Rp 6,825 on 2.11 million shares changing hands and gold and nickel producer PT Aneka Tambang fell Rp 75 to Rp 1,350 on 17.05 million shares traded.

Associate director of Bahana Securities Andre Cita said that foreign investors, who remained scared about entering the country's shattered financial market, were not yet tempted to risk their funds here due to political and economic uncertainties, especially on account of local companies' huge debts.

"Foreign investors are scaling back from the market due to bleak corporate earning prospects here," he said.

He said that even though the political situation had been relatively calm over the past few days, foreign investors' confidence had not improved yet.

"Investors will closely watch the political situation at home," he said citing peaceful student demonstrations in the capital on Wednesday.

Three hundred university students marched through downtown Jakarta on Wednesday demanding President B.J. Habibie lower escalating food prices or step down.

Bahana's Cita said that the Indonesian government had to resolve its huge economic and political problems before it could expect foreign investors to return to the market.

"There are a lot of problems that will keep the market under continued selling pressures," he said.

But unlike stocks, the rupiah continued its bullish charge on Wednesday closing slightly higher at 8,800 against the American dollar after hitting an intraday high a 8,725.

Currency dealers said that limited dollar-selling by state and offshore banks, especially from Singapore, gave a big boost to the rupiah against the American dollar on Wednesday.

"It is just strange for me that Singapore banks placed large dollar-selling orders today," a chief dealer with a local private bank said.

Currency dealers said improving sentiment on the rupiah was boosted by IMF director for the Asia-Pacific Region Hubert Neiss' statement praising the government's progress in implementing economic change.

"But I think the strengthening of regional currencies prompted investors to unload their dollars," another dealer said. (aly)