Jakarta Composite Index, Rupiah Fall as Trouble in Egypt Shakes Up Markets Around the World

By webadmin on 09:13 pm Jan 31, 2011
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Nariswari Dita Yudianti & Bloomberg

The Jakarta Composite Index dropped 2.3 percent as instability in Egypt rattled investors in global markets, analysts said.

“The political crisis in Egypt is putting strong pressure not only on local and regional markets but also on the global market, as investors shift to safer assets like gold and dollars,” said Yustian Hartono, an analyst at eTrading Securities.

The JCI shed 78.44 points, or 2.3 percent, to close at 3,409.17. About three billion shares worth Rp 5 trillion ($555 million) changed hands, with decliners leading gainers 205 to 31.

Bank Rakyat Indonesia, the nation’s second-biggest lender by assets, dropped 4.9 percent to Rp 4,850. BRI declined after Teddy Oetomo, from Credit Suisse Group, downgraded it from “outperform” to “neutral,” citing the bank’s “limited potential for earning benefit as interest rates increase.”

Tire producer Multistrada Arah Sarana lost 1.8 percent to Rp 280 on fears that turmoil in Egypt would hurt the company’s exports. “There’s concern about the Suez Canal, which links Europe with Asia, as political instability may disrupt transportation,” said Muhamad Sugiarto, an analyst at Lautandhana Securindo.

State coal miner Tambang Batubara Bukit Asam fell 2 percent to Rp 19,750 despite forecasts of more sales. Its president director, Sukrisno, said this year’s coal sales could rise to 16.9 million tons from 12.9 million tons last year.

The rupiah fell on speculation that Bank Indonesia will leave its key rate unchanged at a record low 6.5 percent when it meets on Friday. The currency fell to a one-week low of 9,043 against the dollar on Monday, down from 9,018 on Friday.

The trouble in Egypt reverberated around the region, with the MSCI Asia-Pacific Index sliding 1 percent after Egyptian protesters took to the streets for a seventh day to demand the ouster of President Hosni Mubarak.

“It is difficult to sidestep what is going on in Egypt,” said Vishnu Varathan, an economist at Capital Economics (Asia) in Singapore.

“I don’t see investors taking risk exposure in this situation. There is also worry from the policy rate announcement this week.”