By Jan 26, 2011 7:46 AM GMT+0700 -
Indonesian stocks are posting Southeast Asia’s biggest declines as concern the central bank has moved slower than peers in curbing inflation prompts the biggest month of selling by overseas investors since 2005.
The Jakarta Composite Index has fallen 7.3 percent since the start of the year, compared with the MSCI Asia Pacific Index’s 0.7 percent advance, led by a drop in PT Astra International and PT Bank Central Asia. The Jakarta gauge, which rose to a record on Dec. 9, may slump 6.8 percent to 3,200 in coming weeks, according to PT Bahana TCW Investment Management, PT Mandiri Manajemen Investasi and PT Manulife Asset Management, which manage a combined $6.7 billion in Jakarta.
The central bank has kept interest rates at a record low even as the fastest inflation in 20 months threatens incomes for Indonesians, 29 percent of whom earn less than $2 a day. Policy makers in countries from India to Thailand have boosted borrowing costs in the past 10 months to curb rising prices. Foreign investors sold a net $428 million of Indonesian stocks this month, the most since May 2005, data compiled by Bloomberg show.
“It’s profit taking by foreign investors who are worried about inflation,” said Soni Wibowo, vice president of Bahana, which manages about $1.9 billion in Jakarta. “In their view, the central bank is late in raising interest rates. How long the slide continues depends on the foreign fund flow.” more ...
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