The index of the Indonesian Stock Exchange closed 58.70 points or 1.32 percent lower at 4,437.34 points with index of 45 most liquid stocks down 1.82 percent to 747.04 points.
"The BEI index closed this last weekend after report of Chinese economic contraction and US economic recovery being not up to expectation," Panin Sekuritas analyst Purwoko said on Friday.
Purwoko said unemployment allowance was reported rising last week but secondary house sales in December fell below consensus.
Domestic sentiment was marked with rising yield of 10-year state bonds exceeding 8.5 percent and that of 5-year bonds exceeding 8 percent.
"This is because of expectation of high inflation in January on disruption of food distribution," Purwoko said.
Rain triggered floodings that hit most of the country over the past two weeks have disrupted food distribution in this wporlds largest archipelago.
HD Capitals analyst Yuganur Wijanarko said the weakening of regional stock markets and rupiah had prompted heavy share sales at the BEI resulting in correction of BEI index.
There were 190,853 share transactions recorded at the BEI on Friday with 2.88 billion shares worth Rp4.60 trillion changing hands.
Regional markets such as Hang Seng recorded a 1.25 percent fall in index to 22,450.06 points with Nikkei index down 1.94 percent to 15,392.56 points and that of Straits Times shrinking 0.78 percent to 3,075.99 points.
Meanwhile, in inter-bank transactions on Friday afternoon rupiah value fell against the US dollar.
The Indonesian currency traded at the level of 12,179 per US dollar in the closing trade weakening from the level of 12,163 earlier.
Monex Investindo Futures analyst Zulfirman Basir said , ahead of the meeting of the Federal Open Market Committee (FOMC) on Jan. 28-29, rupiah had tended to lose value against the US dollar.
"Fundamentally rupiah is shadowed by worries over the Feds decision to cut its financial stimulus," Zulfirman said.
In addition, investors concern over the impact of potential default on debt repayment by Argentina on global economy, gave negative sentiment to the financial market, he said.
"Technically, the sentiments in the domestic financial market is also weak on current account deficit remaining big," he said.
Chief researcher of Trust Securities, Reza Priyambada, said rupiah contionued to be on the decline as a result of correction experienced by a number of major regional currencies following report of Chinese manufacturing data being not up to expectation.(*)
Editor: Heru Purwanto
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