JCI Falls After Global Commodities Slump, Ongoing Political Concerns

BY :ARIENTHA PRIMANITA & VANESHA MANUTURI

JANUARY 14, 2015

Jakarta. Indonesian stocks and bonds fell sharply on Wednesday triggered by slumps in global commodities price and the majority of regional stocks exchange and refreshed concerns about government credibility in fighting corruption.

The Jakarta Composite Index fell 54.69, or 1 percent, to 5,159.67 on Wednesday, retreating to its lowest level since Dec. 24.

Foreign investors sold Rp 623 billion ($49 million) more in shares than they bought, bringing the total of their net sale to Rp 892 billion so far this year.

Satrio Utomo, an analyst from Universal Broker, said concerns over drops in global commodity prices and in regional bourses triggered profit taking by foreign investors. The JCI was the second-biggest loser in the Asia-Pacific region on Wednesday, after Japan’s Nikkei.

The House of Representatives’ Commission III, which oversees legal affairs, approved President Joko Widodo’s nomination of Budi Gunawan as the new National Police chief — despite his having been named a suspect by the Corruption Eradication Agency (KPK) on Tuesday.

Budi’s appointment is yet to be approved by the House’s plenary meeting, but analysts said the events had dented Joko’s credibility as a clean reformer.

“Many have seen the House as a troubled institution, but if both the parliament and executive are troubled, there will not be any changes in Indonesia.”

“Many foreign funds in Indonesia are expecting reforms in the country,” Universal’s Satrio said.

Global commodity prices — including palm oil — fell on Wednesday after the World Bank cut its forecast for global growth to 3 percent this year, below a previous forecast of 3.4 percent.

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