Telkom, Mandiri push stock index down
Rendi A. Witular, The Jakarta Post, Jakarta
The Jakarta Stock Index dropped sharply on Tuesday following an announcement that state-owned telecommunications company PT Telekomunikasi Indonesia (Telkom) once again failed to fulfill a promise to complete its controversial reaudit of its 2002 financial report.
In addition, plans by the government to start selling a 10 percent stake in Bank Mandiri, the country's largest bank in terms of assets, in the first quarter of this year also contributed to the stock market decline.
The Index fell by 1.8 percent or 14.38 points to 772.49 from 786.87, the bourse's highest record since its inception in 1982.
"The drop was mainly driven by an accounting problem in bluechip Telkom, and the government's plan to start the second public offering of Mandiri," said stock analyst Fendi Susiyanto from BNI Securities.
Telkom is the largest counter on the Jakarta Stock Exchange (JSX) accounting for 17 percent of the market capitalization, and Mandiri is the fourth largest with 5.8 percent.
Fendi explained that the audit issue had prevented Telkom shares from surging higher, which it has been doing since mid- 2003, with the company continually promising investors that it would settle the problem immediately.
Telkom shares ended 2.5 percent lower, or Rp 200 to Rp 7,850, after the company reported to the JSX that its auditor PricewaterhouseCoopers would not be able to complete the reaudit of Telkom's 2002 financial report by the end of January as planned.
Telkom said in the report: "Since the outstanding accounting issues between Telkom and the auditors have been resolved and agreed, the company expects to be able to finalize its financial statement and file its 2002 Form 20-F by the middle of February."
In reply to the report, Fendi said: "It is becoming harder and harder for investors to believe that Telkom will keep its promise this time. Such broken promises will only tarnish the company's image."
The problems with Telkom's 2002 financial report emerged after the U.S. Securities and Exchange (SEC) rejected an earlier filing because the report was audited by an Indonesian accounting firm which was not properly registered in the U.S.
The SEC has demanded that Telkom, which is also listed on the New York Stock Exchange, resubmit its 2002 report as soon as possible or risk being delisted.
Elsewhere, bluechip Mandiri ended the day lower by 12 percent, or Rp 175 to Rp 1,325, the biggest percentage drop since the shares have been traded on the JSX, beginning in June last year.
Fendi explained that investors were unloading Mandiri shares for profit-taking because the inflow of new shares would affect the price. Moreover, Mandiri shares were now considered to be somewhat overvalued, as a more realistic value should be in the Rp 1,200 range.
Other bluechips, such as consumer goods company PT Unilever Indonesia and cigarette producer PT Gudang Garam also dropped on profit-taking.
Gudang Garam, the second largest counter with 6.4 percent, fell by Rp 200 to Rp 15,400, while Unilever, the third largest counter with 6.3 percent, declined by Rp 100 to Rp 3,800.
Several analysts believed that the current bird flu outbreak in the country had not affected the Index much as there have been no human cases here.