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Stocks near 3-year low as foreign investors post huge sell-off
Foreign investors sold Rp 1
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Foreign investors sold Rp 1.05 trillion (US$75.8 million) more in Indonesian stocks than they bought on Thursday, as selling sprees hit markets across Asia and Europe, fueled by spooked investors and economic uncertainties over the spreading coronavirus outbreak.
The selling spree caused Indonesia’s benchmark stock index, the Jakarta Composite Index (JCI), to drop by 2.69 percent on Thursday to 5,535.69, a level unseen since March 2017, according to data from the Indonesia Stock Exchange (IDX).
IDX president director Inarno Djajadi attributed the rout to panicking stock market investors around the globe as the number of new COVID-19 coronavirus cases outside China for the first time exceeded the number of new cases where the outbreak began.
“This had quite a significant impact on our market,” Inarno told The Jakarta Post over the phone.
According to the World Health Organization, there were 459 new cases and 44 deaths in 37 countries as of Wednesday. China reported 412 new confirmed cases.
The coronavirus has infected more than 80,000 people and killed nearly 2,800, the majority in China. Cities in the world’s second-largest economy are in lockdown, with factories temporarily halting production.
Stock markets around the world responded negatively, with Tokyo seeing a 2.1 percent drop, Seoul down by 1.1 percent, Sydney by 0.8 percent and Singapore 0.3 percent. London opened with a 1.8 percent decline while Paris and Frankfurt each lost 2 percent.
Jasa Utama Capital Sekuritas analyst Chris Apriliony echoed Inarno’s sentiments, saying that the spread of the virus created concerns over global economic prospects.
“Such concerns then pushed the JCI into bearish territory, which then caused a panic among investors,” he told the Post.
All nine sectoral indices at the IDX closed in the red on Thursday, led by the finance sector with a 3.94 percent decline. Bank Rakyat Indonesia (BBRI), Bank Central Asia (BBCA) and Bank Mandiri (BMRI) all led the downward trend, their share prices dropping by 7.8 percent, 2 percent and 3.9 percent, respectively.
This was followed by the basic industry sector, which was down 2.66 percent, and the mining sector with a 2.43 percent decline.
The rupiah also weakened on Thursday, decreasing by 0.61 percent to 14,025 per US dollar.
According to PT TRFX Garuda Berjangka director Ibrahim, the currency had been influenced by the threat of a cooling economy caused by the outbreak.
As the stock market continues to feel the pressure of negative sentiments from the outbreak, investment management firm Bahana TCW Investment chief economist and investment strategist Budi Hikmat said investors could use the opportunity to gradually increase their equity investments.
“But this only applies to those who have some extra money lying around,” he said, adding that such an investment strategy would be adjusted according to each investor’s risk appetite and conditions.
As the spread of the COVID-19 coronavirus has yet to show signs of slowing down, Chris projected the JCI would continue to decline to no lower than 5,500 during the first quarter of this year.
Although the JCI has remained in the red since Monday, Inarno said he was hopeful the index would pick up following the release of a government stimulus package to counter the effects of COVID-19 on the economy.
“If the package is able to create a positive impact on the economy, the JCI will mirror that effect and pick up along with it,” he said.
The government has announced a Rp 10.3 trillion stimulus package that is expected to boost consumer spending and reinvigorate Indonesia’s tourism, including through staple needs and housing subsidies, as well as tax breaks for airlines, hotels and restaurants, among other measures.
