MARKET DEVELOPMENT
Indonesian Stocks Decline Most Since 2013 on Earnings Concerns
Indonesian Stocks Decline Most Since 2013 on Earnings Concerns
28/04/2015 (Bloomberg) - Indonesian stocks dropped the most since August 2013 and the rupiah declined on concern an economic slowdown will damp earnings growth.
The Jakarta Composite Index fell 3.5 percent to its lowest close since Jan. 21. PT Bank Mandiri and PT Bank Central Asia, the nation’s two largest banks by market capitalization, slumped more 4 percent. Palm oil producer PT Astra Agro Lestari sank 9 percent after quarterly profit tumbled 80 percent from a year earlier.
Foreign investors have been net sellers of Indonesian stocks for all but two of the past 12 trading days through Friday after the stock gauge climbed to a record this month. Today’s losses come amid mounting international condemnation of Indonesia’s plan to execute convicted drug smugglers as early as Tuesday. French President Francois Hollande has said there will be “consequences” if one of its citizens is put to death.
“Corporate results from some of the largest Indonesian companies confirmed that the economy is weakening,” said Audrey Goh, Singapore-based investment strategist at Standard Chartered Bank. There’s probably “some negative sentiment” from the planned executions, she said.
President Joko Widodo’s resumption of executions for drug smugglers after a hiatus under his predecessor has increased international focus on Southeast Asia’s largest economy and the world’s fourth-most populous nation. Australia, which has a history of spats with its northern neighbor, has warned the deaths may damage ties and hasn’t ruled out sanctions or diplomatic action.
Growth Target
The rupiah declined 0.5 percent versus the dollar. The currency slid 0.5 percent last week, halting a five-week rally, after Bank Indonesia Senior Deputy Governor Mirza Adityaswara said gross domestic product will likely increase 5.4 percent this year, the bottom end of the central bank’s estimates.
About 8 stocks fell for each one that rose on the benchmark equity gauge. An index of agricultural shares tumbled 6.1 percent, its sharpest loss since October 2011. PT Perusahaan Perkebunan London Sumatra Indonesia dropped 7.2 percent.
A measure of financial stocks sank 4.9 percent. Bank Mandiri declined 5.5 percent after posting a 4.3 percent increase in net income in the first quarter and saying it plans to raise funds in a rights issue. Bank Central Asia fell 4.7 percent, its steepest retreat since Oct. 2.
“Investors are adjusting to the reality that the economy is really slowing down,” Jeffrosenberg Tan, portfolio manager at PT Sinarmas Asset Management, said by phone from Jakarta Monday. “We’ve been cutting back our positions in stocks,” Tan said. “I wish we had cut back even steeper.”
The Jakarta Composite Index fell 3.5 percent to its lowest close since Jan. 21. PT Bank Mandiri and PT Bank Central Asia, the nation’s two largest banks by market capitalization, slumped more 4 percent. Palm oil producer PT Astra Agro Lestari sank 9 percent after quarterly profit tumbled 80 percent from a year earlier.
Foreign investors have been net sellers of Indonesian stocks for all but two of the past 12 trading days through Friday after the stock gauge climbed to a record this month. Today’s losses come amid mounting international condemnation of Indonesia’s plan to execute convicted drug smugglers as early as Tuesday. French President Francois Hollande has said there will be “consequences” if one of its citizens is put to death.
“Corporate results from some of the largest Indonesian companies confirmed that the economy is weakening,” said Audrey Goh, Singapore-based investment strategist at Standard Chartered Bank. There’s probably “some negative sentiment” from the planned executions, she said.
President Joko Widodo’s resumption of executions for drug smugglers after a hiatus under his predecessor has increased international focus on Southeast Asia’s largest economy and the world’s fourth-most populous nation. Australia, which has a history of spats with its northern neighbor, has warned the deaths may damage ties and hasn’t ruled out sanctions or diplomatic action.
Growth Target
The rupiah declined 0.5 percent versus the dollar. The currency slid 0.5 percent last week, halting a five-week rally, after Bank Indonesia Senior Deputy Governor Mirza Adityaswara said gross domestic product will likely increase 5.4 percent this year, the bottom end of the central bank’s estimates.
About 8 stocks fell for each one that rose on the benchmark equity gauge. An index of agricultural shares tumbled 6.1 percent, its sharpest loss since October 2011. PT Perusahaan Perkebunan London Sumatra Indonesia dropped 7.2 percent.
A measure of financial stocks sank 4.9 percent. Bank Mandiri declined 5.5 percent after posting a 4.3 percent increase in net income in the first quarter and saying it plans to raise funds in a rights issue. Bank Central Asia fell 4.7 percent, its steepest retreat since Oct. 2.
“Investors are adjusting to the reality that the economy is really slowing down,” Jeffrosenberg Tan, portfolio manager at PT Sinarmas Asset Management, said by phone from Jakarta Monday. “We’ve been cutting back our positions in stocks,” Tan said. “I wish we had cut back even steeper.”