Shares in Jardine Cycle sink on Indonesia poll setback
Policy uncertainty after election setback triggers drop in thecar distributor's stock
Shares in Jardine Cycle & Carriage, a car distributor that gets about 93 per cent of its revenue from Indonesia, fell yesterday after early results showed the opposition party favoured by investors in the southeast Asian nation failed to win enough support to rule on its own.
The stock dropped as much as 9.1 per cent, its biggest intraday decline since October 2011, before closing down 5.87 per cent at S$45.37 (HK$281.50). It had surged 45 per cent from February 5 to April 8.
"Jardine Cycle has had a fantastic move," said Alan Richardson, whose Samsung Asean Equity Fund outperformed 96 per cent of peers tracked by Bloomberg during the past 12 months. "It's inevitable that there would be profit taking, given the setback in the Indonesian elections."
Presidential front runner Joko Widodo may need to form a coalition to win office as unofficial estimates show his party, Indonesia's main opposition, holding an unexpectedly slim lead in parliament.
Under Indonesian election laws, the Jakarta governor may need an alliance to stand in July's presidential election. That would limit his ability to carry out policy changes in the country, after expectations for such moves helped boost the Jakarta stock market 17 per cent in the past three months.
The Jakarta Composite Index dropped almost 3.7 per cent to its session low of 4,739.79 points, heading for its second day of decline, after Widodo's Indonesian Democratic Party of Struggle took 19.6 per cent of the votes in elections on Wednesday, based on a tally by Lingkaran Survei Indonesia. That is about half the level projected in a poll last month. Formal results will not be declared until May 9.
Astra International, majority owned by Jardine Cycle and Indonesia's biggest car retailer, sank 6.23 per cent.