Indonesian Stocks Experience Decline

Indonesian stocks have gone down on today, thereby dragging the benchmark gauge JCI down near to the lowest value in last 6 months. Investors are currently concerned that the Indonesian Government’s attempts to rein in fuel subsidies will increase the expenses of living and thereby spur inflation in this Asian country.

JCI, also known as The Jakarta Composite Index has experienced a decline of 1.4% and it is currently at 4766.67. The gauge is actually heading towards its sharpest fall since 30th August. If market capitalization is concerned, PT Unilever Indonesia is the biggest consumer company that is registered in the index. The same declined by 4% on today, marking the biggest fall on the gauge.

According to the Head of Indonesia Equity Research at the Citigroup Inc.’s Indonesia unit, Ferry Wong, the investors are now concerned over the possibility of a fuel price hike in future. If this happens, the same will bring some negativity to the market along with it. Thereby, investors are currently trying to lock in the profits, as explained by Wong.

If the statistics of 2013 is taken into consideration, the benchmark stock gauge of Indonesia has risen by 10%. The reported earnings of the Indonesian stocks have thereby been driven to 18.9 times of the profits. Incidentally, on 8th March, the Indonesian stocks were trading at 19.4 times of the profit, marking its best level since January, 2011.

On this February, inflation figures in Indonesia have jumped to a level, that’s the highest in last 20 months. The reason is mainly the power tariffs and the higher food price. This sort of high inflation has reduced the scope for the Central Bank of Indonesia to cut down the current interest rates. Susilo Bambang Yudhoyono, the President of Indonesia, on yesterday, stated that the Government is currently formulating a move to come up with a more targeted fuel subsidy policy. This will ensure that costs still are put under some sort of control in the longer run.

The largest company in Indonesia, PT Astra International has gone down by 1.3%. On the other hand, the renowned Instant noodle maker of the country, PT Indofood Sukses Makmur experienced a tumble of 4.5%. This marks the company’s biggest drop since 4th June. PT Kalbe Farma, a famous Indonesia based pharmaceutical company went down by 3.2%, marking its biggest decline since 18th December.

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