Stocks take tumble but rupiah holds its ground

JAKARTA (JP): The rupiah maintained strength yesterday, staying at 14,200 against the U.S. dollar, while stock prices on the Jakarta Stock Exchange (JSX) dropped 2 percent on continuing profit taking and security concerns.

Currency dealers said the rupiah rebounded slightly in late trading with the focus on Indonesia's donors meeting in Paris next week.

"The market is directionless, with the market focusing on next week's donors meeting in Paris," a dealer with a local private bank said.

Dealers said the rupiah touched the day low of 14,300 against the U.S. dollar in morning trading, tracking the yen which fell through the 141 level against the dollar.

However, anticipation of a good outcome in Paris seemed to help cap rupiah's downside, dealers said.

The rupiah closed at 14,200/250 yesterday, compared to an opening of 14,000/200. The currency closed Wednesday at 14,100.

Bank Indonesia also supported the rupiah by keeping its intervention rate in the money market at 70 percent per annum for one-month funds.

Dealers said the short-term outlook for the rupiah was not quite bright because the market was especially concerned over possible rioting coinciding with the planned commemoration by opposition figurehead Megawati Soekarnoputri of the riots which followed the takeover of the Indonesian Democratic Party's Jakarta headquarters by a rival group on July 27, 1996.

Megawati's faction plans to carry on with the commemoration on Monday even though the police have refused to issue a permit for the gathering.

Similar concerns over possible rioting in the capital city on Monday were shared by fund managers in the stock market, stockbrokers said.

Bahana Securities' associate director and head of equity sales, Andre Cita, said some foreign fund managers decided to stay away from the market because of possible rioting.

"I think there are people who are concerned that a situation may develop as we draw close to July 27. Some fund managers are getting cautious about the market and moving to the sidelines until things are clearer," Cita said.

Jakarta main price index, the JSX Composite Index, fell 9.250 points to 473.805 on a volume of 249.6 million shares worth Rp 323.84 billion (US$22.8 million).

Losers led gainers by 87 to 23.

Stockbrokers said domestic investors, which had dominated the local market for some time, had turned into net sellers yesterday as they took profits.

Cita added that many foreign investors had also sold their stock holdings to protect their positions while they left for their summer vacations.

"Some fund managers I talked to have started to take their vacations. You know this is a major vacation time for foreign fund managers and some of them do not want to have too much exposure to Indonesia while they are away."

He added that the absence of news or rumors on the privatization of state firms was also responsible for the weakening of the stock price index yesterday.

"The market was boosted previously by privatization issues. Without privatization stocks leading the market, we have no leadership," he said.

State firms previously coveted by local investors due to their privatization issues like Semen Gresik, Tambang Timah and Aneka Tambang all suffered losses yesterday.

Cement manufacturer Semen Gresik dropped Rp 450 to close at Rp 11,500 on 707,000 shares changing hands, general mining company Aneka Tambang shed Rp 325 at Rp 2,425 on 34.65 million shares, and tin miner PT Tambang Timah dipped Rp 600 at Rp 8,300 on 1.3 million shares. (rid)