PT Unilever Indonesia, a unit of the world’s second-largest consumer goods company, led declines for Indonesian companies as foreign funds sold the nation’s equities on speculation this year’s rally has been excessive.
Unilever Indonesia dropped 4.8 percent to 29,800 rupiah as of 10:53 a.m. local time, trimming this year’s gain to 43 percent. It accounted for almost a third of the losses of the Jakarta Composite Index, which slid 0.9 percent. Indonesia’s benchmark stocks measure has risen 15 percent this year.
“The stock has become too expensive and the overall market is under pressure right now,” John Rachmat, head of equities research at PT Mandiri Sekuritas, said by phone. “But there has been nothing negative from its business fundamentals.”
Unilever Indonesia traded at 45.5 times 12-month projected earnings on May 28, the highest since at least 2005, according to data compiled by Bloomberg. The stock’s 14-day relative strength index was above 70 for 19 days through May 30, the longest streak since at least June 2008, data showed. A reading of 70 or higher suggests to some investors that shares are poised to fall.
The company is considered to be a proxy for the Indonesian equities market, which has been under pressure as foreign investors trimmed their holdings of emerging-market equities, Rachmat said. Foreign institutional investors sold a net $171.2 million of Indonesian equities on June 3, the highest since August 2011, data compiled by Bloomberg show.