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Index falls on poor corporate reports, global sentiment
The countryâs stock price barometer on the Indonesia Stock Exchange (IDX) tumbled on Wednesday as corporate earnings updates spread gloomy sentiments around the local bourse
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he country's stock price barometer on the Indonesia Stock Exchange (IDX) tumbled on Wednesday as corporate earnings updates spread gloomy sentiments around the local bourse.
Meanwhile, emerging-market stocks fell for a third day amid concerns on China's growth and on the timing of the US Federal Reserve's interest rate hike.
The Jakarta Composite Index (JCI) ended 1.4 percent lower on a daily basis at 4,608.74, as foreign investors recorded Rp 373 billion of net sells during the day of trading.
The JCI led the declines among Asia Pacific stock markets, which mostly corrected by less than 1 percent on Wednesday.
Analysts attributed the declines to global sentiment, particularly stemming from China and the US. They added that the decline was also triggered by unsatisfying corporate results and profit-taking, especially following a lack of positive updates from the domestic market.
'Corporate earnings played a part in Wednesday's trading, but the impact will be short-lived because expectations of the country's macro-economy have significantly improved. If by the end of next month the consumer index improves, or other encouraging factors, there's a possibility that share prices that fell today because of the respective company's sluggish performance will bounce back,' Koneksi Capital analyst Alfred Nainggolan said.
A number of big caps announced their results on Wednesday, with some indicating slowing business throughout the first nine months of 2015, including consumer goods giant Unilever (UNVR), whose profits grew by only 3 percent and showed slower bottom-line growth quarter after quarter, and XL Axiata (EXCL), which recorded Rp 506.5 billion in net losses.
Shares of UNVR slipped by 1.16 percent after it announced its results, while EXCL was down by 1.38 percent from the previous day of trading. Shares of UNVR were among the day's worst performers.
The country's largest lender by assets, Bank Central Asia (BBCA), major plantation firm Astra Agro Lestari and the Lippo Group-affiliated Matahari Department Store (LPPF) ' which all announced their results on Wednesday ' were also among the day's daily laggards, albeit booking varying outputs in their respective financial reports.
Alfred said that the declines might also have been triggered by profit-taking, and corporate results might only serve as a good time for investors to unwind their gains.
The JCI gained 11 percent month-to-date, paring its yearly loss to 11 percent, after the government announced economic packages that investors applauded as serious efforts to improve the country's slowing economy.
Lanjar Nafi from Reliance Securities said that the index had corrected as investors were consolidating their investments in the local stock market ahead of the Fed meeting on Oct. 27 and 28, during which US economic updates will be announced, and on concerns over China's economic slowdown, as confirmed by its unsatisfying corporate earnings.
UBS lowered its forecast for China's 2016 economic growth to 6.2 percent from 6.5 percent, while the Westpac-MNI China Consumer Sentiment Indicator showed confidence in the economy sank to a record low this month, according to Bloomberg.
