Stocks tumble to an historic five-year low
JAKARTA (JP): Local stock prices tumbled to a five-year low yesterday, but the rupiah continued to muster strength to break the 11,000 resistance level against the U.S. dollar.
Stockbrokers and analysts said both foreign and local investors dumped shares following the government's backtracking in its privatization plan and the looming financial calamity in Russia.
"Investors are just selling blind, getting rid of whatever they still hold," Clifford Ma, a fund manager at Samuel Asset Management in Jakarta, told Bloomberg News.
Stock prices on the Jakarta Stock Exchange (JSX) dropped 4.5 percent, with the main price index falling 15.92 points to close at 339.02, a level not recorded since 1993.
Over the week, the index lost 12.7 percent.
Mashill Jaya Securities' stock analyst Johanes Salim said Russia's crisis would slow down the recovery in other crisis- ridden countries, including Indonesia.
Vickers Ballas Tamara Securities' research head Noraya Soewarno added that domestic factors, especially the backsliding in the privatization plan, were responsible for the market plunge.
"Investors who have been upbeat about state enterprises are now disappointed and, as a result, they are dumping stocks of state firms," she told The Jakarta Post.
The government announced recently that it would divest only 14 percent of its stake in cementmaker Semen Gresik, instead of the 35 percent announced previously, due to a public outcry from locals near its West Sumatra plant.
Noraya added that lingering worries over the country's political and social situation were another discouraging factor for many investors in considering long-term investments.
"Taking a long-term investment position in the country's equity market is too risky as uncertainty remains high," she said.
The rupiah, unhindered by the turmoil in the stock market, continued to gain ground against the U.S. dollar yesterday, passing 11,000 to touch an intra-day high of 10,900.
Its close of 11,075 to the dollar was slightly firmer than Thursday's 11,150.
Currency dealers attributed the strengthening rupiah to limited dollar selling by state banks and the absence of negative news at home.
However, the rupiah opened weaker at 11,200/11,300 in London market.
Dealers said the rupiah standing was supported by news that the International Monetary Fund would soon disburse another US$1 billion loan for Indonesia.
Indonesia also expects disbursement of $8 billion of loans during the period until March 1999 from members of the Consultative Group on Indonesia.
"That expected huge supply of official loans will further boost the rupiah," said a dealer with a local private bank.
He added that the high domestic bank interest rates were also responsible for the improving rupiah.
The rates were attracting money out of stocks into high- yielding Bank Indonesia riskless promissory notes.
On the JSX, losers led gainers by 72 to 16, with 72 stocks unchanged and 128 others untraded.
Those in negative territory were led by state domestic telephone provider PT Telkom, the largest stock on the exchange, which fell Rp 300, or 12 percent, to close at Rp 2,200 on 8.4 million shares traded.
State international telephone company PT Indosat, which fell Rp 575 to Rp 7,400. Giant cigarettemaker PT Gudang Garam fell Rp 200 to Rp 7,925 and competitor PT HM Sampoerna lost Rp 150 to Rp 2,125. (aly)