Indonesian Stocks Pare Losses After Biggest Decline Since 2013

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Indonesian stocks erased almost all its earlier losses, following the benchmark index’s biggest rout since 2013.

The Jakarta Composite Index fell 0.1 percent to 5,242.16 after slumping as much as 1.5 percent. The gauge tumbled 3.5 percent yesterday as palm oil producer PT Astra Agro Lestari reported an 80 percent drop in three-months profit and international condemnation mounted about the government’s plan to execute convicted drug smugglers as early as Tuesday.

“People have been anticipating a slowdown but recent earnings results suggest it’s worse than people expected,” said Arief Wana, Jakarta-based director at PT Ashmore Asset Management Indonesia. “We have been raising our cash holdings.”

Global funds have been net sellers of Indonesian stocks for all but two of the past 14 trading days after the stock gauge climbed to a record this month. The index is up 0.3 percent this year, lagging behind an 11 percent gain by the MSCI Emerging Markets Index. Foreign investors sold net of $140 million of the nation’s equities on Tuesday.

The Jakarta Composite’s relative strength index fell to 29.9 Tuesday, below the 30 level that signals stocks are oversold to some investors.

The rupiah was little changed versus the dollar. The currency slid 0.5 percent last week, halting a five-week rally, after Bank Indonesia Senior Deputy Governor Mirza Adityaswara said gross domestic product will likely increase 5.4 percent this year, the bottom end of the central bank’s estimates.

President Joko Widodo’s resumption of executions for drug smugglers after a hiatus under his predecessor has increased international focus on Southeast Asia’s largest economy. Australia, which has a history of spats with its northern neighbor, has warned the deaths may damage ties and hasn’t ruled out sanctions or diplomatic action, while French President Francois Hollande has said there will be “consequences” if one of its citizens is put to death.

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