Market Starts Reacting to Reshuffle Rumors
Tuesday, 09 February, 2010 | 13:37 WIB

TEMPO Interactive, Jakarta:The Stock Market yesterday start reacting to cabinet reshuffle rumors, especially the rumors about the plan to replace Finance Minister Sri Mulyani Indrawati.

According to Lana Soelistianingsih, an economis analyst from securities company Samuel Sekuritas Indonesia, share indices in Asia fell below one percent on average.

“But the Indonesian Stock Exchange composite stock price index (IHSG) fell the most, by 1.72 percent,” Lana told Tempo in Jakarta yesterday.

She explained that if stock exchanges in neighboring countries fell but Indonesia suffered the most, there is a domestic factor influencing the local market.

The indications will be more visible in Monday (today Indonesia time) if the Dow Jones index and European stock exchange close positive but the Indonesian Stock Exchange close is still negative.

“Tomorrow (today) might be more visible,” she said.

Up until yesterday, according to Lana, investors have not made Century Bank case a factor in their decision making even though there are several who chose to wait and see.

But if the case develops into a cabinet reshuffle rumor, investors will be more sensitive and could retreat from the local stock exchange.

If there is a cabinet reshuffle in a short time, she added, it could tarnish President Susilo Bambang Yudhoyono’s credibility.

If Sri Mulyani were to actually be moved from her current position, the market would be impacted.

“Even if the new post needs someone like Sri Mulyani, a replacement would make the market believe more that she was moved because of the Century case,” said Lana.

“And if Sri Mulyani is out of the cabinet, the market will be completely negative.”

Last week, rumors of a cabinet reshuffle spread after several Democrat party officials met with President Yudhoyono last Thursday.

In this meeting, the party officials suggested the president consider a cabinet reshuffle.

An analist from Panin Sekuritas, Purwoko Sartono, was of a similar opinion.

According to him, the Century Bank case followed by the cabinet reshuffling rumors contributed to the falls on the stock market yesterday.

“This factor made foreign investors retreat from the market because they felt uncomfortable.”

And there is also the rumor of replacing Sri Mulyani from her current position.

Sri Mulyani’s credibility has been acknowledged by international financial agencies.

She was even chosen as the best Asian Finance Minister and was able to oversee Indonesia’s economy through the 2008 crisis.

But Danamon Bank Head Economist Anton Gunawan said he considered that the cabinet reshuffle rumors have not had any significant impact on the market yet.

According to him, the stock index drop was caused more by regional factors, like the Australian Central bank maintaining its reference interest rate.

The Indonesian Stock Exchange IHSG in the last trade dropped 43.404 points (1.72 percent) to a level of 2,475.572 from last Friday’s position.

GRACE S GANDHI | ARIE FIRDAUS