Indonesian Stocks Drop to Two-Year Low, Headed for Bear Market

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Indonesian stocks slumped to a two-year low, headed for a bear market as investors grew increasingly jittery over the economic impact of the fast spreading coronavirus on Southeast Asia’s largest economy.

The Jakarta Composite Index fell as much as 3.7% Friday, down 20% from its February 2018 record high. The benchmark gauge is down 10% this month, heading for its worst such performance since October 2008.

Foreign investors have net sold almost $300 million of Indonesian shares this week as the nation’s currency and bonds were also routed. While the rupiah is down 2.4% this week, the yield on benchmark 10-year government bonds has risen more than 25 basis points, according to data compiled by Bloomberg.

“Indonesian stocks are falling along with global equities amid concerns on global economic slowdown from this outbreak of coronavirus,” said John Teja, a director at PT Ciptadana Sekuritas Asia. “Nothing is spared in Indonesia, even the defensive consumer stocks are getting hit.”

Shares of consumer goods company PT Unilever Indonesia fell as much as 5.9%, while PT Bank Central Asia dropped 4.1% and PT Astra International slipped 5.5%, among the biggest drags on the Jakarta Composite.

With no confirmed case ofcoronavirus in Indonesia so far, and the market’s reliance on the domestic economy, the rout in the nation’s equities should be nearing an end, according Thendra Crisnanda, head of research at PT MNC Sekuritas.

“The index should reach the bottom between February and March,” Crisnanda said. “The impact of the virus on Indonesia isn’t significant and our domestic economy will remain resilient. This is a good time for investors to buy as valuation has been low and the dividend season is coming soon.”

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