JAKARTA (Dow Jones)--Indonesian markets were hit with a second day of selling Thursday as foreign investors used a general climate of risk aversion to sell into the strong gains made by stocks in recent months.
The Indonesia Stock Exchange's main index was recently down 4.9% at 2238.207 points, its lowest intraday level since July, adding to a 2.9% decline made Wednesday. The rupiah was also under pressure with the U.S. dollar at IDR9,700, up from IDR9,690 late Wednesday but limited by suspected central bank selling of the greenback.
Share trading volume was moderate at IDR2.2 trillion so far, with foreigners net sellers of IDR115 billion. They were net sellers of IDR167 billion Wednesday with analysts estimating foreign investors had sold a net IDR3 trillion or so over the previous 13 sessions.
"The selloff shows that some investors, mostly foreigners, are switching their portfolios from high-risk assets in emerging markets to international bonds in the U.S.," said Adrian Rusmana, a director at Sucorinvest Securities.
Some traders, however, said the correction was warranted and healthy, with the main index still up 66% since start of the year. Traders put near-term support for the index at 2200 points.
Investors - both domestic and foreign - have been bidding up Indonesian assets this year amid a general climate of optimism on the domestic demand-led economy and relative political stability under the government of President Susilo Bambang Yudhoyono, who has pledged to push ahead with reforms in his second term.
Standard & Poor's on Friday raised its outlook on Indonesia's sovereign rating to positive from stable, while bond giant Pimco said the country could regain investment-grade status in three to five years.
But given the pace of the gains, some pullback was warranted, traders said. "I think selling pressure will continue at least until next week, when the central bank will meet to decide its interest rate policy," said Rifki Isnaini Hassan, a fund manager at Andalan Artha Advisindo.
Some traders said a weaker rupiah was also spurring selling in stocks, given the view - albeit at the margin - it could provide some leeway for the central bank to raise interest rates soon.
Stocks with some sensitivity to rupiah declines, like banks and automotive companies, were leading the decliners Thursday. Bank Mandiri, the nation's largest bank by assets, fell 5.0% to IDR4,300, while Bank Rakyat dropped 6.2% to IDR6,850 and car distributor Astra International lost 5.8% to IDR30,100.
Coal miner Bumi Resources dropped 8.3% to IDR2,200 on concerns over its high U.S. dollar debt.
Currency market traders said Bank Indonesia was suspected of having sold around $30 million in the market to support the rupiah. The domestic currency's decline brought it back to the level where it was at the start of the month, but the local unit is still 12% higher than its 2008 close, making it one of the best performers among regional currencies.
Analysts at Singapore's OCBC were tipping the U.S. dollar in a range of IDR9,600 to IDR9,800 Thursday.
Government bonds were weakening amid the general decline in Indonesian assets, with yields higher across the curve in thin trade. The FR30 seven-year government bond yield was at a bid/ask spread of 10.10%-10.05%, from 9.7487% late Wednesday.
Dow Jones Newswires
October 29, 2009 00:08 ET (04:08 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.
No comments:
Post a Comment