Uncertainty pushes stocks, rupiah down
JAKARTA (JP): Shares and the rupiah continued to lose ground for the second consecutive day yesterday, with stock prices on the Jakarta Stock Exchange (JSX) down 3.4 percent.
Currency dealers said trading of the rupiah remained thin as most market operators were discouraged by the country's political uncertainty.
"Some operators are questioning when and how the country will hold its next poll next year," a chief dealer with a local private bank said.
He said the rupiah closed at 11,650/11,850 to the U.S. dollar in the spot market after touching a day low of 11,900 in the morning session when a demonstration was held at the U.S. embassy here.
It was slightly lower than the 11,600 close the previous day.
Dealers said there was no reason for the rupiah to strengthen against the dollar in the near future due to the country's gloomy economic outlook and political uncertainty.
The rupiah is expected to weaken to 14,000 levels with positive incentive in the market.
"Trading activities were thin as most people are still waiting for the release of the IMF-brokered loan package," the dealer said.
The International Monetary Fund (IMF) is expected to disburse the next US$1 billion part of its total $43 billion bailout package this month to help the country in its dire economic situation.
"The IMF loan is the only positive news for the country's market," the dealer said.
The IMF's director for Asia Pacific, Hubert Neiss, was scheduled to submit his report to the IMF executive director Michel Camdessus last Monday. The fund's executive board will make a decision based on the report.
Mirroring the sinking rupiah, stock prices on the Jakarta Stock Exchange (JSX) fell to 399.59 points on a total turnover of 148.48 million shares changing hands on the regular market worth Rp 175.45 billion (US$15.25 million).
A broker with Bali Securities, Hendra Sunarto, said trading activities remained sluggish throughout the day investors were still worried about entering the country's market for political and economic reasons.
He said stocks of companies linked to former president Soeharto's family and the giant Salim Group conglomerate remained under heavy selling pressure amid a backlash against the Soeharto clan.
"Most investors continued to discard the stocks to cut the likelihood of more possible losses."
He said foreign fund managers remained on the sidelines as major foreign brokerage houses like SBC Warburg, WICarr and Merrill Lynch securities continued to place large selling orders on the stocks.
The stock price of Bimantara Citra, controlled by Soeharto's second eldest son Bambang Trihatmodjo, fell Rp 25 to Rp 325 on a total turnover of 5.93 million shares, toll road operator PT Citra Marga Nusaphala Persada (CMNP) closed unchanged at Rp 375 on 4.40 million shares, stock prices of noodle maker PT Indofood Sukses Makmur shed Rp 425 to Rp 1,150 on a total turnover of 9.13 million shares and the stock price of cement maker PT Indocement Tunggal Perkasa slid Rp 25 to Rp 2,875 on 442,000 shares.
An analyst with a local securities firm said the country's persistent political and economic uncertainty led most foreign fund managers to keep their distance.
"There is no reason for foreign fund managers to enter the market. All they can do now is watch our political and economic situation." (aly)