Indonesian stocks fell, dragging the benchmark index (JCI) down by the most in six months, on concern the government’s efforts to rein in fuel subsidies will boost living costs and spur inflation.
The Jakarta Composite Index dropped 1.4 percent to 4,766.67 at 11:12 a.m. in Jakarta, heading for sharpest fall since Aug. 30. PT Unilever Indonesia, the largest consumer company in the index by market capitalization, was the biggest drag on the gauge today, falling 4 percent.
“There’s an expectation that there will be a fuel price hike,” Ferry Wong, head of Indonesia equity research at Citigroup Inc.’s Indonesia unit, said by phone today. “It would be negative for the short term. People are also locking in profits.”
The benchmark stock gauge has risen 10 percent this year, driving reported earnings to 18.9 times. It traded at 19.4 times profit on March 8, the highest level since January 2011.
Inflation accelerated to a 20-month high in February on higher food price and power tariffs, reducing the scope for the central bank to cut interest rates. President Susilo Bambang Yudhoyono said yesterday the government is formulating a more targeted fuel subsidy policy as costs increase.
PT Astra International, the nation’s largest company, fell 1.3 percent. Instant noodle-maker PT Indofood Sukses Makmur fell 4.5 percent, bound for its biggest drop since June 4. Pharmaceutical company PT Kalbe Farma fell 3.2 percent, the most since Dec. 18.
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