Stocks tumble 5.5% to seven-year low
Stocks tumble 5.5% to seven-year low
JAKARTA (JP): Shares prices on the tattered local stock market
careened to a seven-year low on Monday on weak regional markets
and political restlessness at home, stockbrokers and analysts
said.
But the rupiah closed slightly firmer at 11,050 against the
U.S. dollar in the Jakarta spot market on Monday, compared to its
close of 11,150 on Friday.
Stockbrokers said continuing massive selloffs by foreign and
domestic investors pushed down prices of most blue-chip stocks on
fears the government would impose a foreign exchange control to
buttress the ravaged rupiah.
Repeated denials by key ministers, including Bank Indonesia's
governor, that Indonesia would not follow the Malaysian move to
impose foreign exchange controls have failed to allay investor
anxiety.
"We have seen persistent selloffs by both foreign
investors ... and market fears that this will not be the last
exit by foreign investors," head of research of Sigma Batara
Fadjar Limin Sutandi said.
Brokers said most foreign brokerage houses in the local
exchange -- which had placed bulk selling orders over the past
few days -- continued to discard stocks, including of companies
with strong fundamentals like cigarettemaker Gudang Garam,
fishing firm Daya Guna Samudera and mining enterprise PT Aneka
Tambang.
"How can we expect the market to stabilize if these good
stocks are under selling pressure," he said.
"Maybe this is the time for foreign investors to say good bye
and they will return here again next year."
The stock price of Aneka Tambang fell Rp 175 to Rp 1,075 on
8.98 million shares, Gudang slid Rp 1,050 to Rp 4,075 on 2.20
million shares and Daya Guna Samudera shed Rp 600 to Rp 2,300 on
484,000 shares.
A broker from Trimegah Securindolestari said investors'
expectation of a temporary technical rebound after most stocks
were undervalued was not realized.
The Jakarta Stock Exchange (JSX) Composite Index fell 5.5
percent, or 14.83 points, to 256.83, a level not seen since Sept.
26, 1991.
Total turnover was 170.52 million shares changing hands valued
at Rp 122.81 billion.
Analysts and brokers also attributed the sharp decline in to
continued student demonstrations in the capital and several major
cities, demanding the government lower prices and immediately
investigate the wealth of former president Soeharto.
"People do not base their investment on fundamentals anymore
but rather on the political situation at home," Trimegah's broker
said. He added that the market's fear of more demonstrations and
riots in the days ahead put a resounding damper on investor
sentiment.
News reports said about 200 students protested outside the
House of Representatives on Monday, demanding the government
thoroughly investigate the assets of the Soeharto family and
cronies from his 32 years in power.
Despite the stock slide, the rupiah remained stable, hovering
around the 11,000 level against the American dollar in limited
volume on Monday.
Currency dealers said offshore participants were still
reluctant to take any position on the rupiah because of the
lingering political uncertainty.
"Offshore operators remain jittery with the increasing
political tension in the country," a chief dealer with a local
private bank said.
Dealers said political tension ahead of the special session of
the People's Consultative Assembly on Nov. 10 was expected to
increase in the wake of widespread demonstrations in major cities
in the country.
"Overseas operators will stay clear of the market unless there
are some fresh leads in the market," the dealer said. (aly)