Rendi A. Witular, Jakarta – After a week-long rally triggered by relatively trouble-free legislative elections, the Jakarta stock market plunged on Monday on fears of political instability following news that several politicians may reject the general election results.
The Jakarta Composite Index, which comprises 388 firms, ended lower by 11.805 points, or 1.5 percent, to 767.812, compared with last week's close.
The index rose 4 percent throughout last week until Thursday. The market was closed on Friday due to the Easter holiday. Telecommunications and banking blue chips led the decliners.
Shares of state-owned telecommunications company PT Telekomunikasi Indonesia (Telkom) fell by Rp 200 to Rp 7,800 on profit-taking, after sharply rising by 16 percent last week. Telkom is the largest counter on the Jakarta Stock Exchange.
Its rival, PT Indonesian Satellite Corp. (Indosat) also dipped by Rp 100 to Rp 4,200 after surging 15 percent last week.
Blue-chip Bank Mandiri, the country's largest lender in terms of assets, ended down by Rp 25 to Rp 1,425. The drop was tailed by other banking blue chips, such as Bank Central Asia (BCA), which ended lower by Rp 75 to Rp 3,675, and Bank Rakyat Indonesia (BRI), which dropped by Rp 25 to Rp 1,675.
Stock analyst Fendi Susiyanto from BNI Securities said that fear of political uncertainty had further fueled the already fragile stock market, which was overheated by a sharp increase last week on positive sentiment after a peaceful general election.
"The index is already fragile with profit-taking, as several blue chips have already been overbought. The possibility that several political parties may reject the poll result has exacerbated losses on the stock market," said Fendi.
He explained that investors were afraid that the political row could lead to further security instability, since the parties could mobilize their supporters nationwide for a mass rejection.
Citing endemic vote-rigging, 19 of the 24 political parties contesting this year's legislative election rejected on Saturday the April 5 poll tally and demanded the General Elections Commission (KPU) call for a reelection.
The rejection, which has been criticized by analysts and the other five parties, is spearheaded by former president Abdurrahman "Gus Dur" Wahid, who is now an adviser to the National Awakening Party (PKB).
Fendi said the index would consolidate this week within the range 742 to 772, before rising to a psychologically important level above 772.
Regarding the drop in several banking blue chips, Fendi said that was mainly caused by the overbuying of bank shares, rather than by the central bank's recent move in shutting down Bank Asiatic and Bank Dagang Bali.
"The closure sent a positive sign to the banking sector, to comply with prudent banking practices. Such a move was needed to improve the local banking industry," he said.
Concerns at potential political uncertainty also hit the rupiah, pulling the currency down to Rp 8,595 against the US dollar on Monday, from Rp 8,575 on Thursday.