JAKARTA: Foreign investors have been increasingly selling their stocks, putting more pressures on the Composite Stock Index (IHSG).
From early this week to yesterday, foreign investors had booked IDR2.74 trillion in net-sale, while the IHSG had dropped 4.68% from 3,739.06 on Monday to 3,571.74 yesterday. Yesterday, the IHSG slumped 2.37% (86.58 points), the worst at regional level since the Shanghai index only fell 0.46%, the Singapore Straits Times index dropped by 0.01%, and Hang Seng index slid by 1.33%. In the meantime, the Kospi, Philippine bourse, and Thailand bourse indices dropped by 0.41%, 1.23%, and 0.57%, respectively, while the benchmark indices on some other bourses increased. For example, the Nikkei 225 index jumped 0.01%. Yesterday, foreign investors sold stocks in nearly all sectors, especially banking stocks. PT Astra International Tbk was the prime driver yesterday, followed by PT Unilever Indonesia Tbk, PT Bank Rakyat Indonesia Tbk, and PT Bank CIMB Niaga Tbk. Of 420 stocks listed on Indonesia Stock Exchange (BEI), 174 stocks fell, 60 increased, and the rest were stagnant. An analyst at PT Panin Sekuritas Tbk Purwoko Sartono said the bourse index correction yesterday was triggered by continual sales made by investors. "The index drop this week is attributable to the fact that Europe has not recovered from the crisis. Moreover, the Fed's worry about the US economy doesn't help either." However, he added, the current market correction had opened opportunities for investors to buy on weakness amid the positive economic conditions. Data by Morgan Stanley showed the Morgan Stanley Capital Index (MSCI) for the emerging markets had soared 136% from its record low in March 2009. Such optimism was supported by projection by the IMF saying the emerging market economy would grow 6.4% in 2011, tripling from 2.2% recorded by developed countries. The inflation of more than 6% this year has created a negative sentiment, prompting investors to realize profits by selling their stocks in the stock market. Window dressing, which usually is able to bolster the index at the yearend, is predicted not to be able to boost the IHSG significantly. "The index has reached its peak. Even if there is correction, the index will not hit another record high," told Purwoko. Head of Research at PT Sinarmas Sekuritas Jeffrosenburg Tan explained the profit-taking action would continue in the next several weeks. He also warned of the threat of inflation. At the moment, the market players were waiting for the central ban's policy on the benchmark BI Rate. "The index has been overvalued right now. Inflation will also be a threat. Investors consider right now the perfect moment to realize their profits. The central bank (BI) is expected to reevaluate their BI rate policy." Although the BI rate hike would negatively affect the index movement in the short-term, it would be able to offset inflation. (wiw)
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