Profit-Taking, Cement Prices Weigh on JCI

JANUARY 16, 2015

Jakarta. Jakarta stocks took another beating on Friday amid profit-taking by foreign investors, with shares of cement producers hit hardest after the government said it would seek to cut the cement retail price.

The Jakarta Composite Index fell 0.78 percent to 5,148.38, extending its loss for the week to 1.3 percent.

President Joko Widodo’s announcement on Friday afternoon of an average 14 percent fuel price cut was unable to lift investors’ mood.

“I think this was mostly due to regional sentiment,” said Andrew Argado, head researcher at Recapital Securities. “Foreign investors are still posting a net sell; I think this is because of a general decline regionally and profit-taking.”

Friday’s trading saw 7.3 billion shares worth a combined Rp 5.9 trillion ($469 million) change hands, with foreign investors accounting for 36 percent of trade volume. Foreign investors sold Rp 333 billion more in shares than they bought, adding to their total net sales this year of Rp 1.8 trillion.

Other bourses across the region also posted a decline on Friday, including the Straits Times Index, which fell 1.1 percent, and Japan’s Nikkei, dropping 1.4 percent.

In addition to the fuel price cut, President Joko also announced a Rp 3,000 reduction in the price of a sack of cement, which currently sells for around Rp 50,000 in Jakarta.

Cement prices, unlike those for fuel oils sold by state energy company Pertamina, are not regulated by the government, but analysts have suggested the government may try to influence them through its control of Semen Indonesia, which has a 44 percent market share.

Shares in Semen Indonesia fell 7.4 percent in Friday’s trading, while shares in Indocement Tunggal Prakarsa, the country’s second-biggest producer, dropped 10 percent. Holcim Indonesia, the third-largest cement maker, saw its shares lose 1.4 percent. The cement makers’ decline  dragged basic industry and chemical company stocks down 4.8 percent as a group.

Rupiah strengthened by 0.2 percent to 12,593 against US dollar, from 12,617 against the greenback a day earlier, according to Bank Indonesia data.

The 10-year bond yield fell further to 7.6848 percent from 7.7273 percent, data from Indonesia bonds Pricing Agency showed.