Indonesia Stocks Drop as Commodities Decline on Growth Concern
By Berni Moestafa
June 23 (Bloomberg) — Indonesia’s benchmark stock index fell, led by coal and nickel producers, after oil and metal prices dropped on concern global growth will slow more than expected, reducing demand for the nation’s commodities.
PT Bumi Resources, Indonesia’s biggest coal producer, fell 10 percent after crude oil slumped $2.52 a barrel yesterday, reducing the allure of alternative fuels. PT International Nickel Indonesia dropped 5 percent as the price of the metal declined. Commodity prices retreated after the World Bank yesterday said the global recession this year will be deeper than expected.
“With the reduced forecast there’s concern that demand for commodities and energy will also be lower,” said Agus Yanuar, chief investment officer at Jakarta-based PT Samuel Aset Manajemen, which manages about $160 million. “Overseas investors are realizing their gains in commodity stocks.”
The Jakarta Composite index decreased 60.64 points, or 3.1 percent, to close at 1,914.39, the lowest since May 28. The gauge has risen 41 percent so far this year, driven by energy and metal stocks, on optimism President Susilo Bambang Yudhoyono will be reelected in July and help boost economic growth.
The world economy is forecast to contract 2.9 percent this year, compared with a prior estimate of a 1.7 percent decline, the World Bank said in a report. Global growth will return next year with a 2 percent expansion, the Washington-based lender said, cutting its forecast from a 2.3 percent prediction about three months ago.
Bumi, Asia’s largest exporter of power-station coal, plunged 10 percent to 1,660 rupiah, the steepest drop since May 14. PT Medco Energi Internasional, the nation’s biggest listed oil company, decreased 8.3 percent to 2,750 rupiah.
Crude oil for August delivery fell 3.6 percent to $67.50 a barrel in New York yesterday, the lowest settlement since June 3. The contract was at $66.91 a barrel in after-hours trading as of 4:05 p.m. Jakarta time.
International Nickel dropped 5 percent to 3,800 rupiah. PT Timah, the nation’s largest tin producer, retreated 5.5 percent to 1,890 rupiah. Nickel for three-month delivery fell 4.6 percent to $14,500 a metric ton in London yesterday while tin dropped 2.9 percent to $14,400 a ton.
PT Indonesia Air Transport, a charter service provider, slumped 10 percent to 60 rupiah. The company has reduced the number of planes it uses to lower costs and because the number of customers has declined, Bisnis Indonesia newspaper reported, citing Corporate Secretary Jo Denie. Denie couldn’t be reached when called at his office to confirm the report.
Meanwhile, PT Astra Agro Lestari, Indonesia’s largest plantation stock that plants only oil palm trees, jumped 5.4 percent to 17,500 rupiah, the biggest gain since May 7. Palm oil for September delivery rose 4.1 percent to 2,246 ringgit ($633) a metric ton at 5:08 p.m. in Kuala Lumpur, recovering from a 5.6 percent slump yesterday.