Significant declines in share prices of Indonesia’s two major cigarette producers, PT Gudang Garam (GGRM) and PT Hanjaya Mandala Sampoerna (HMSP) following the government’s announcement of a steep hike in the tobacco excise has prompted analysts to anticipate an imminent industry shake-up as they downgraded tobacco stocks. The recent drop in the two companies’ stocks on Monday, the first trading day after the announcement on Friday, has cast a shadow over the tobacco industry in general, which has remained stagnant in at least the last five years, as demand is expected to weaken. Shares of Gudang Garam nosedived by 20.64 percent to Rp 54,600 (US$3.89) per share and Sampoerna plummeted by 18.21 percent to Rp 2,290 per share. The companies are two of the heavyweights at Indonesia Stock Exchange (IDX). With a combined market value of Rp 382.31 trillion, they account ...

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