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)