Profit Taking after Long Rally Causes Indonesian Stocks to Decline 10%
After having recorded a five-day winning streak, Indonesia's benchmark stock index (known as the Jakarta Composite Index or IHSG) fell 0.10 percent to 4,892.29 points on Monday (21/04). The forming of a doji star and limited movement of the IHSG (due to reduced buying volume) implied that - without the publication of good news triggering positive market sentiments - the index would decline. Today's depreciation of the Indonesian rupiah exchange rate and mixed Asian indices were reasons for investors to engage in profit taking.
Foreign investors showed their lowest trading activity so far in 2014 on Monday, contributing only 16 percent to total trading activity on the Indonesia Stock Exchange. However, they did record net buying (IDR 316 billion). Total foreign net share buying now stands at IDR 32.8 trillion (USD $2.9 billion) in 2014.
Although Japan recorded a higher trade deficit due to increased imports, it did not translate into falling stocks on the Nikkei index as market participants were content to see further yen depreciation. China's benchmark index, on the other hand, declined after investors sold healthcare and technology stocks because of valuation downgrades.
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