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Jakarta Post

Shares, rupiah dive deeper as selling spree continues

Share prices on the Indonesian Stock Exchange (IDX) and the Indonesian currency further weakened on Tuesday amid the issuance of poor trade data and the bearish conditions in other emerging markets

The Jakarta Post
Jakarta
Wed, August 19, 2015

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Shares, rupiah dive deeper as selling spree continues

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hare prices on the Indonesian Stock Exchange (IDX) and the Indonesian currency further weakened on Tuesday amid the issuance of poor trade data and the bearish conditions in other emerging markets.

The Jakarta Composite Index (JCI) declined 1.63 percent to end the day at 4,585.39 amid a selling spree carried out by foreign investors. The index has lost about 20 percent from its peak of 5,518 recorded in April.

The rupiah declined 0.4 percent to 13,800 as of 4 p.m. Jakarta time. It fell as low as 13,851 in the morning, the weakest level since July 1998, taking its drop to 10.6 percent this year.

The selling spree dominated the trading on the exchange as investors sold their shares in response to the country'€™s poor export data in July and bearish conditions in other emerging markets, securities analysts said.

The selling spree brought year-to-date net foreign sales to Rp 597.3 billion (US$43.22 million) compared to Rp 15 trillion net foreign buying in April, according to the IDX data.

Banking shares, such as state-owned lenders Bank Rakyat Indonesia (BRI), Bank Mandiri, Bank Negara Indonesia (BNI), and private lender Bank Central Asia (BCA), dominated the top laggards list together with conglomerate Astra International Indonesia.

The selling spree in the local market continued as regional bourses also dropped with Thailand'€™s recording the lowest fall in the Southeast Asia after a blast near a shrine in central Bangkok popular with tourists on Monday that claimed dozens of casualties. The country'€™s bourse fell by 2.56 percent.

China'€™s stock market dropped by 6.15 percent, the lowest in Asia, according to data by the IDX.

Kiswoyo Adi Joe, an investment analyst of Investa Saran Mandiri, said that Chinese'€™ yuan devaluation remained a rattle to the regional bourses.

'€œInvestors are still afraid of the devaluation effect,'€ he said, adding that a surplus recorded by Indonesia'€™s current account was not considered good-enough news for the investors.

The government released on Tuesday an official data on the country'€™s trade balance, which booked a $1.3 billion trade surplus, the widest since December 2013. However, the surplus was caused by the fall in imports rather than the rise in the country'€™s exports.

According to the national statistics agency (BPS), exports dropped by 19.2 percent to $11.40 billion year-on-year in July, while imports dropped 28.44 percent to $10.07 billion in the same period.

Irene Cheung of the Australia and New Zealand Banking Group Ltd. in Singapore said that on the trade front, the numbers were bad and growth continued to be a big concern. That added to a weakening bias for the rupiah that was already hit by the stronger dollar and the yuan'€™s devaluation, Bloomberg reported.

Universal Broker head of research Satrio Utomo told The Jakarta Post that currently the bearish mood continued in the local market as investors feared that the Chinese government'€™s decision to devalue the yuan would affect negatively on Indonesia'€™s future exports.

'€œBesides the yuan'€™s devaluation shock, the investors also wait for the Bank Indonesia (BI) decision on its benchmark interest rate, while we know that the BI is waiting for The Fed'€™s rate decision too,'€ he said. (prm)

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