Jakarta. Indonesia's benchmark stock index dropped slightly on Wednesday (17/05) amid negative sentiment following the government's new regulation giving more power to tax authorities in accessing taxpayers' accounts.
The Jakarta Composite Index (JCI) closed 0.56 percent lower at 5,615.5.
"The regulation surely inspires a negative sentiment in the banking-related sector," Binaartha Sekuritas analyst Nafan Aji told the Jakarta Globe, adding that it will force customers who own banking accounts to open their data to tax authorities, which means that the wealthy may take a wait-and-see stand before they make any major banking transactions.
The index that tracks 89 stocks in the financial sector, including major banks such as Bank Central Asia, Bank Mandiri and Bank Negara Indonesia, dropped by 0.7 percent.
Decliners beat gainers by 197 to 137.
Nafan said Bank Indonesia, the central bank, will give a positive catalyst to stocks in the banking-related sector as it is expected to keep the benchmark rate steady at 4.75 percent tomorrow.
Foreign investors, which made up 35 percent of the trading activity, sold Rp 202.2 billion ($15.2 million) more in shares than they bought, while domestic investors bought Rp 202 billion more in shares than they sold.
The index that tracks 42 stocks in the miscellaneous industries, including textiles and automotive businesses, led the drop with 2.3 percent decline, followed by the index that tracks mining industry with 1.38 percent decline.
According to Nafan, the negative sentiment is only short-term.
The rupiah weakened to 13,306 against the dollar, compared to 13,298 on Wednesday, according to data from Bank Indonesia.