Stock index ends sharply down on profit taking

The Jakarta Post ,  Jakarta   |  Tue, 01/13/2004 2:57 PM  |  Business

The Jakarta Post, Jakarta

After rallying for three consecutive trading days to hit its highest level in the nation's history last week, the Jakarta Composite Index fell on Monday on profit taking by investors and a decline in several benchmark stock markets overseas.

The stock index ended lower by 1.5 percent or 11.186 points to 742.506, after it recorded an all-time high of 753.692 on Friday.

The drop in the Index was led by state-owned telecommunications company PT Telekomunikasi Indonesia (Telkom), as its shares tumbled by 5.3 percent or Rp 400 to Rp 7,200.

Telkom is the largest counter on the Jakarta Stock Exchange accounting for 17 percent of the market capitalization, meaning a shift of one point in Telkom shares can move the Index by about 17 percent.

Telkom's rival PT Indonesian Satellite Corp. also dropped by 1.2 percent or Rp 200 to Rp 16,400.

Profit taking also hit other blue chip companies such as automotive assembler and distributor PT Astra International, which dropped by 2.5 percent or Rp 150 to Rp 5,500, and the nation's largest lender Bank Mandiri, which fell by 2 percent or Rp 25 to Rp 1,225.

A stock analyst with a state-owned brokerage house said the decline had been anticipated by investors as the Index had surged too fast last week, making it vulnerable to being hit by speculators for profit taking.

""Such a drop commonly occurs when the Index surges rapidly out of its normal pattern. But in the long run, I'm sure that the Index will remain strong and is unlikely to go below 710,"" he said.

He explained that speculators considered that this was the right time for them to leave the bourse and book a quick and high return.

He also said that the decline in the global benchmark stock markets had also affected the local bourse.

Singapore, Hong Kong and Taiwan markets dropped, while a holiday in Japan, added to investors' general reluctance to build fresh positions.

The Singapore Strait Times fell by 0.5 percent to 1842.49, while Hong Kong Hang Seng by 0.3 percent to 13352.22 and Taiwan by 0.1 percent to 6219.71.

In the United States, the Nasdaq Composite Index shed by 0.16 percent on Friday to 2,096, a day after rising to its highest close since July 3, 2001, and the Dow Jones industrials declined by 0.50 percent to 10,529, a day after touching the highest finish since March 19, 2002.

Foreign media reported that a disappointing rise in U.S. payrolls had contributed to the drop.

Elsewhere, the rupiah strengthened against the U.S. dollar on Monday, benefiting from the weakness of the dollar against other global currencies.

The rupiah ended up at Rp 8,305, its highest in nearly six months, from Rp 8,340 on Friday.

At 07:30 GMT (2:30 p.m. Jakarta time) the dollar was around $1.2847 to the euro and 106.43.

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