Indonesian stocks declined, heading for the lowest close since Feb. 26, as rupiah forwards touched the lowest level in more than three years and foreign investors sold the nation’s stocks for the 12th consecutive day.
The Jakarta Composite Index (JCI) dropped 2.5 percent to 4,656.59 at 11:42 a.m local time. The gauge has slumped 11 percent since climbing to a record on May 20, exceeding a drop of 10 percent that some investors consider a correction. One-month forwards on the rupiah declined 0.1 percent after falling yesterday to the weakest level since August 2009.
Asian emerging-market currencies and stocks slumped today as the U.S. Federal Reserve considers paring asset purchases. A weaker rupiah threatens the profits of companies that either rely on imported raw materials or have high dollar-denominated debt, Andy Ferdinand, analyst at Batavia Prosperindo Sekuritas said by phone today. Foreign funds sold a net of $1.23 billion of local stocks in 12 days through June 10, according to data compiled by Bloomberg.
“The market is dropping because of concerns over the weaker rupiah,” John Teja, a director at Ciptadana Securities, said by phone today. “The market has gone up so much, some investors decided to book profit.”
The nation’s stocks were downgraded to underweight today by UBS AG strategist Nicholas Smithie, who cited rising valuations that have made them the fourth-most expensive among emerging-market equities after the Philippines, Mexico and Chile.
PT Telekomunikasi Indonesia (TLKM), the country’s biggest telecommunications company, fell 3.8 percent, heading for the lowest close since Feb. 26. The stock was the biggest drag on the benchmark measure.
PT Bank Rakyat Indonesia (BBRI) dropped 1.8 percent, poised for the lowest close since Feb. 8. National carrier PT Garuda Indonesia fell 1.9 percent. Auto distributor PT Astra International, the largest company in the index by market capitalization, lost 1.5 percent, heading for its lowest close since Aug. 31, 2012.
The benchmark index is trading at 13.9 times projected 12-month earnings, compared with 15.9 times at its peak last month. Trading volume was 17 percent higher than the 30-day average for this time of day. The measure’s 30-day volatility index, a measure of price swings, was at 20.2, the highest level in 11 months.
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