Share prices in the Jakarta Stock Exchange slid into negative territory on Tuesday (09/05) as investors sold off stocks to ensure profit margins following a widely controversial guilty verdict in incumbent Jakarta Governor Basuki 'Ahok' Tjahaja Purnama's blasphemy hearing. (Antara Photo/M Agung Rajasa)
JCI Drops as Investors Sell Off Shares Following Ahok's Guilty Verdict
BY :DION BISARA
MAY 09, 2017
Jakarta. Share prices in the Jakarta Stock Exchange slid into negative territory on Tuesday (09/05) as investors sold off stocks to ensure profit margins following a widely controversial guilty verdict in incumbent Jakarta Governor Basuki "Ahok" Tjahaja Purnama's blasphemy hearing.
The Jakarta Composite Index, the country's benchmark stock index, fell 0.19 percent to 5,697.06 on Tuesday, ending four straight sessions of gain, which had been mainly driven by robust economic growth and corporate earnings in the first quarter this year.
Reza Priyambada, an analyst at financial services company Binaartha Sekuritas, said that market participants took an opportunity to cash in their gains amid news of collapsing global coal prices due to Australia's plan to increase coal production.
The shock of Ahok's guilty verdict, passed down by the North Jakarta District Court on Tuesday morning, further contributed to the index's downward spiral.
"Ahok is already perceived as a clean and reformist politician. Markets see this court sentence as a set back in Indonesia's legal system, which could affect foreign investors' perception about the continuation of reform in the country," Reza said.
Foreign investors only contributed to 26 percent of Tuesday's trade values, far lower than a daily average of 35 percent so far this year. However, those investors still bought Rp 632 billion ($47 million) more shares than they sold on Tuesday.
Ahok was sentenced to two years in prison, though prosecutors had previously sought a reduced sentence after the incumbent's loss in the capital's gubernatorial run-off election in April.
Ahok had been facing blasphemy charges since November after making off-hand remarks about a Koranic verse during a public speech, inciting mass demonstrations by Muslim hardliners who called for the ouster and arrest of the embattled governor.
"In one way, investors can take refuge in the fact that the decision will not increase security risks. But, in the long-term investors will most likely take note of how the Jakarta court came to its decision under massive public pressure," Reza said.