The key Jakarta stock index finished 3.5 percent lower on Monday, its deepest loss in nearly two months, on concerns over the US economy and as Indonesian shares tracked losses in other Asian markets.
The fall in the Jakarta Composite Index was paired with a weakening rupiah. The Indonesian currency fell nearly one percent to 9,238 per dollar as most Asian currencies declined due to risk aversion amid global equities weakness and what many analysts said was an unwinding of yen carry trades.
The share index dipped as low as 1,692.22 points, as investors sold blue chips like Telekomunikasi Indonesia Tbk and Bank Mandiri Tbk. The Jakarta index finished at 1,698.82 points with a daily turnover of 3.19 trillion rupiah ($345.4 million). Only eight counters posted gains while 166 shares traded lower and 25 were unchanged.
Regional bourses fell steeply on Monday with Hong Kong down by four percent. Kuala Lumpur and the Philippines plunged nearly five percent. Some economic data out of the United States, following on declines in the China and US markets, has raised worries, analysts said.
A survey released on Friday said US consumer sentiment fell more than expected in February, hitting a five-month low on concerns over incomes and jobs. "What happen in the domestic market was due to concerns over global economic conditions," Fendi Susiyanto, head of research at BNI Securities, told Reuters.
"Fundamentally there is positive news around for us... but I think investors were cautious about bargain hunting," he said, adding a recovery would depend on US market action later on Monday.
The fall in Jakarta shares was led by drops in telecommunications and banking. Telkom, the largest telecommunication company on the Jakarta bourse, closed 3.7 percent lower at 9,000 rupiah while Indonesia's largest lender, Bank Mandiri, finished 4.3 percent down at 2,250 rupiah.
The country's fifth largest lender PT Bank Danamon Tbk declined by 6.14 percent to 5,350 rupiah while PT Bank Central Asia Tbk, Indonesia's second largest bank, finished 1.03 percent lower at 4,800 rupiah. John Teja, head of equities sales at Ciptadana Securities, said investors have priced in most of the good news from domestic markets such as lower-than-expected inflation.
Inflation in Indonesia is down from six-year highs and despite heavy floods in Jakarta last month, February's consumer price inflation was not as high as many had expected, giving the central bank room to cut interest rates during a Tuesday meeting.
Analysts said the market would fall further if the Indonesian central bank decided not to cut the benchmark rate at a meeting on Tuesday. "I think the possibility of an interest rate cut had mostly been priced in. If Bank Indonesia decides not to cut the rate, the market might fall further," Teja said.
Indonesia's central bank is expected to lower its key interest rate on Tuesday for the 10th time since April last year to nine percent, a recent Reuters poll showed.