Yunindita Prasidya and Riska Rahman, Jakarta – Indonesian stocks fell 5 percent on Thursday morning following the Jakarta administration's decision to retighten its restrictions, prompting the bourse to halt trading for 30 minutes.
The capital city made the decision to retighten the large-scale social restrictions (PSBB) due to the unabating surge in COVID-19 cases.
The Indonesia Stock Exchange (IDX) halted trading at 10:36 a.m. Jakarta time as the Jakarta Composite Index (JCI) shed 257.5 points to 4,891.88 just two hours after the opening bell.
Foreign investors dumped Rp 484.72 billion (US$32.97 million) in stocks to exceed stock purchases, bringing foreign net sell to Rp 33.43 trillion to date, while 423 stocks plummeted, went 28 up and 83 remained unchanged amid the trading halt.
State-owned Bank Mandiri, state-owned PT Telekomunikasi Indonesia and Indonesia's largest private bank, Bank Central Asia (BCA), suffered the worst of the foreign selling spree as their stocks plunged respectively 6.93 percent, 5.71 percent and 4.24 percent.
The rupiah exchange rate depreciated 0.31 percent on Thursday morning to Rp 14,795 against the US dollar.
"The market reaction to [Jakarta's retightening] the PSBB is normal, and the decision is needed to contain the COVID-19 infection," IDX trading director Laksono Widodo told the press via text message.
The day before, Jakarta Governor Anies Baswedan announced that the administration was reinstating the PSBB amid the rising daily tally of COVID-19 cases in the capital, effective Monday (Sept. 14).
The capital has recorded more than 1,000 cases per day over the last few days, and its transmission rate has been rising since it reopened specific business sectors starting June under the "transitional PSBB", only two months after imposing the strict PSBB in March and April.
"Investors seem worried that the economy will worsen again to the point that the JCI slump of March will happen again, hence the panic in the market right now," analyst Chris Apriliony of Jasa Utama Capital told The Jakarta Post bytext message on Thursday.
The Indonesian bourse saw its first stock trading suspension since the 2008 financial crisis when the COVID-19 pandemic arrived on the archipelago's shores in March. Market panic reached an all-time high in March alone, when the IDX's circuit breaker was triggered six times.
The JCI hit its lowest point when it plunged to 3,937.63 on March 24. It had been rallying in recent months with many analysts projecting that the JCI would close above 5,500 at the end of the year, before the news on Jakarta's PSBB reinstatement struck the market.
"The JCI this year will most likely reach its highest point at 5,500," Chris said, upending the earlier projection on the benchmark index's recovery.
He added that the index was still likely to move sideways by the end of the year, possibly within the 5,200 level. He also noted that foreign investors would only return when mass vaccination was already under way, due to the high uncertainty of the country's economy and the continuing increase in nationwide COVID-19 cases. (prm)