Local stock market continues to slide

Selling pressures continued Monday on the Indonesian Stock Exchange (IDX), upon rising concerns that higher inflation would force the central bank to raise the benchmark interest rate, experts say.

Securities dealers said that most blue chip stocks fell, albeit amid thin trading, thereby further driving down the Jakarta Composite Index (JCI) by another 1 percent (or 33.48 points) to 3,346.06. This was the fourth day of falling stock prices.

The JCI has fallen 10 percent since the beginning of the year as jittery investors, especially foreign buyers, sold their shares amid growing concerns about the country’s mounting inflation pressures.

The big losers of the day were major mining companies. PT Tambang Batubara Bukit Asam’s (PTBA IJ) shares fell 4.1 percent to Rp 19,700 (US$2.17), its lowest close since Nov. 30, and shares of PT Indo
Tambangraya Megah (ITMG IJ), the local unit of Thailand’s largest coal miner Banpu Pcl, fell 3.9 percent to Rp 46,050.

Shares of Medco Energi Internasional (MEDC IJ), however, jumped 5.1 percent to Rp 3,075, their steepest increase since Dec. 30 following the announcement that Korea Gas would join the liquefied natural gas (LNG) project it was developing in cooperation with Pertamina and Mitsubishi Corp. in Central Sulawesi.

Bloomberg reported that the MSCI Emerging Markets Index dropped 0.2 percent to 1,134.16 as of 5:15 p.m. in Hong Kong, extending last week’s 2 percent retreat. Thailand’s SET Index plunged 4.1 percent, the largest decrease since October 2009 when nationalist protesters said they would rally indefinitely in Bangkok. The Shanghai Composite Index fell 0.7 percent after China International Capital Corp. said inflation would jump.

China, Indonesia, India and the Philippines are among the developing markets whose benchmark stock indexes have slid more than 10 percent from their peaks, declines that signify so-called
corrections for some analysts and investors. The MSCI Emerging Markets Index has sunk 2.5 percent from a Jan. 4 high, as central banks from Russia to Brazil seek to stem price gains.

Meanwhile, the Indonesian rupiah fell, reversing its earlier gains, as concerns about rising inflation are prompting foreign investors to shift funds from the region, dumping stocks and bonds.

The rupiah declined 0.1 percent to 9,070 per dollar as of 3:30 p.m. in Jakarta, according to Bloomberg. The currency appreciated 4.6 percent last year, adding to a gain of 16.1 percent in 2009.

Indonesia’s inflation was 6.96 percent in December, the highest in 20 months. The rupiah fell 1 percent in 2011 as exchange data showed global funds sold US$539 million more local stocks than they bought this month. Overseas funds reduced their holdings of Indonesian government debt to Rp 190.1 trillion ($21 billion) as of Jan. 20, down from Rp 195.8 trillion at the end of December.