Indonesia’s stocks fell, sending the benchmark index to its sharpest loss in more than two months, on speculation the US Federal Reserve will refrain from a third round of stimulus, hurting commodity demand.
Vale Indonesia, the nation’s biggest nickel producer, sank 3.2 percent after government cut the country’s base prices for nickel-ore exports. Timah, the third-largest tin producer, fell the most in five weeks after it resumed spot sales and prices of the metal extended a slump.
The Jakarta Composite Index sank 2.1 percent to 4,009.05 at 3:17 p.m. local time, heading for the sharpest loss since June 4 and the largest decline in Asia today. US data showed yesterday that the world’s biggest economy grew 1.7 percent in the second quarter, faster than the 1.5 percent estimated initially, prompting concerns Fed Chairman Ben S. Bernanke won’t announce a third round of quantitative easing at a meeting of central bankers tomorrow.
“The US data was slightly better than expected, causing market speculators to think there won’t be another QE,” Harry Su, a Jakarta-based analyst at Bahana Securities, said today. “QE is normally good for commodities prices and our market has plenty of commodities stocks. If there’s no QE then that will drag down sentiment on coal, plantation and other mining companies.”
Bumi Resources, Asia’s biggest power-station coal exporter, sank 6 percent, heading for the lowest close since February 2009, while Resource Alam Indonesia, a coal miner, lost 0.9 percent, bound for the lowest level since Dec. 6, 2010.
Overseas investors may also be selling Indonesian stocks on speculation the currency may weaken after it broke through the “psychological barrier” of Rp 9,500 earlier this month, according to Su. The currency has weakened 1.9 percent against the dollar this quarter and was last at 9,548.
“Our current account is a concern and that is likely to put further pressure on the rupiah,” Su said. “Foreign investors may take their money out now while they can still get a return on their rupiah.”