Traders attributed the slump to speculation about the formation of a special agency for strategic commodity exports including coal, crude palm oil and minerals. Such an organisation would raise concerns about greater state control over a critical industry but also potentially help bolster government finances amid a widening fiscal deficit.
(May 19): Indonesian markets fell on Tuesday as speculation mounted that the government will centralise commodity exports to control capital flows and shore up a plunging currency. Palm oil futures rose.
The benchmark Jakarta Composite Index fell 3.5% on Tuesday — taking its year-to-date loss to more than 26% as the world’s worst equity performer — with energy and basic material stocks leading the decline. The currency slid 0.3% against the dollar to another record low, while palm oil futures in Malaysia reversed earlier losses to climb as much as 2.2%.
