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Indonesian Shares Slip as Regional Markets, Bumi Selloff Sink Sentiment
Ardian Wibisono | November 24, 2009

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Lacking any buying catalysts, investors sold Indonesian stocks on Tuesday as regional markets fell, analysts said.

The Jakarta Composite Index lost 9.53 points, or 0.38 percent, to close at 2,471.88. Volume was moderate, with 5.7 billion shares worth Rp 4.1 trillion ($430.5 million) changing hands.

The blue-chip LQ45 index lost 1.76 points, or 0.36 percent, to close at 488.047.

Analysts said selling in regional markets, sparked by Beijing’s warning to Chinese banks to rein in lending, combined with a lack of positive domestic sentiment to drag the market lower.

They also pointed to selling in Bakrie group coal miner PT Bumi Resources, which fell 4.5 percent, as contributing to the market’s decline.

Investors are worried about Bumi’s rising debt load, analysts said, especially after the company last week announced another $300 million convertible-bond issue to finance its subsidiary’s latest stake in PT Newmont Nusa Tenggara.

“Some investors are worried about the cost of interest burdening Bumi’s cash flow,” said Cece Ridwanulloh, an analyst at PT Ekokapital Sekuritas.

However, Poltak Hotradero, head of research at Recapital Sekuritas, said selling of Bumi shares was also likely prompted by some investors’ intention to shift their money into the miner’s convertible bonds.

Both Cece and Poltak predicted that the JCI’s direction over the next two trading days would largely be determined by regional and global markets.

However, profit-taking ahead of the long weekend may also play a role as some investors may prefer to cash out and lower risk.

The Indonesia Stock Exchange (IDX) will be closed on Friday for the Idul Adha holiday.