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Jakarta stocks close at five-month low, trade thin

JAKARTA: Jakarta stocks closed at five-month low on Thursday, extending two-week losses as the few players willing to trade continued to unload stocks across the board.

The composite index ended down 18.95 points or 3.35 percent to 546.53 points but turnover was a thin 621 billion rupiah, compared with an average of one trillion rupiah daily turnover.

"Everyone said the index was going to stop falling at the 550 level but it broke through that level. people got panicked and started selling everything," said a market strategist at a leading local brokerage.

The index broke through the 548 point level, its lowest since October 1. Most traded stocks booked losses and dealers said the market is now looking at 540 points as the next support level.

Last year, however, when the political situation was much more turbulent, the Jakarta market was the third strongest performer in Asia, recording 70 percent gains over the year.

"My prediction is that it could go down further to 520 before the end of the month," said Yoseph Ginting, Danareksa Securities' Asset Management Director.

"It's all sentiment play, everyone is in a euphoria that anywhere else is better than Indonesia. No one wants to invest, although I see nothing wrong with the fundamentals of our stocks," Ginting added.

Dealers expected the market to remain weak until the end of March where new developments are expected to take place.

"The end of the current fiscal year is on March 31, we will soon find out how much the government has achieved in the past fiscal year, and we also have the announcement of the winner for IBRA's stake in Astra on March 25," said one equity dealer.

The Indonesian Bank Restructuring Agency (IBRA), which has put its 40 percent stake in the country's largest car maker up for sale, will announce the name of winner of the bidders in the stake on March 25.

Dealers said despite the oversold market and expectations of continued economic improvements, people were still reluctant to go in because foreign investors generally preferred to put their money somewhere else.

According to a Reuters survey of regional asset managers, Indonesia is the least favourite market over the next three months to one year, while Taiwan and Malaysia were the top picks.

Benchmark Telkom led the declines amid plans by the government to sell 8.8 percent of the company to meet its target revenues from privatisation of state-owned companies.

Telkom ended down 200 rupiah or 5.7 percent to 3,325 rupiah.

Talk of hedge funds speculating in several big cap stocks until March 22 also hit sentiment. Dealers said they did not expect the prices to recover until after March 22, although the significance of this date was not clear.

Cigarette stocks also ended lower following news the parliament has agreed to an increased target in excise tax revenues to 10.27 trillion rupiah for the April-December budget, from 9.27 trillion.

Five major Indonesian cigarette firms, including Gudang Garam and HM Sampoerna contributed more than 80 percent of the total excise tax revenues.

Gudang Garam ended down 75 rupiah or 0.6 percent to 12,025 rupiah and HM Sampoerna closed down 350 rupiah or 2.9 percent to 11,700. -Reuters