Battered rupiah remains a barrier to stock trading<\/p>\n
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
\nare expected to further weaken this week due to continued
\nuncertainty over the battered rupiah.<\/p>\n
Securities analysts said worries over the private sector's
\nmounting offshore debt, which had caused the rupiah to decline
\nfurther in the last few weeks, would continue to cast a shadow
\nover stock-trading activities.<\/p>\n
\"As long as there's no solution to Indonesia's external debt,
\npeople will avoid holding rupiah,\" Laksono Widodo, a senior
\nanalyst with ING Barings Securities, said.<\/p>\n
\"And the more people who refrain from holding the rupiah, the
\nfurther it will fall,\" he said.<\/p>\n
Indonesia has a total external debt of US$140 billion as of
\nthe end of 1997, with the private sector accounting for at least
\n$65 billion.<\/p>\n
The government has repeatedly said it will help debt-ridden
\nprivate companies deal with their overseas creditors but has
\nruled out any corporate bailout.<\/p>\n
The rupiah ended at 13,000\/13,500 to the U.S. dollar in
\nJakarta against an opening of 12,500\/12,800 Friday after nose-
\ndiving to 15,000 in midday trading. The rupiah crashed to an all-
\ntime low of 17,000 Thursday on fears that most Indonesian
\ncompanies would not be able to pay their foreign debts.<\/p>\n
At its current level, the rupiah has lost about 80 percent of
\nits value since early July last year when the rupiah was at
\n2,450.<\/p>\n
Stock analysts said most foreign fund managers would not
\nreturn to Indonesia in coming months as they feared major
\ncorporate bankruptcies would occur in Indonesia.<\/p>\n
\"With the rupiah's current level at 13,000 to the dollar,
\nthere in no single private company which has sufficient cash to
\nsurvive,\" an analyst said.<\/p>\n
\"We're now waiting for the announcement of their collapse in
\ncoming months,\" the analyst, who asked not to be identified,
\nsaid.<\/p>\n
Eddy Widjoyo, an analyst with Mashill Jaya Securities, said
\nthe private sector and the government should quickly find a
\nsolution to the external debt before proceeding with the
\nimplementation of the economic reforms agreed upon with the
\nInternational Monetary Fund (IMF) last week in exchange for the
\nUS$43 billion bailout package for Indonesia.<\/p>\n
\"The economic reforms announced by the government last week
\nfailed to impress financial and stock markets as the rupiah
\ncontinued to fall against the American dollar and stock prices
\nremained under pressure,\" he said.<\/p>\n
\"I think finding a solution to the private sector debt is the
\nimportant thing now,\" head of research at a joint-venture
\nsecurities firm, who asked for anonymity, said.<\/p>\n
\"There is a lot of uncertainty lingering in Indonesia's
\neconomy, in its stock and financial markets and in its political
\nconditions,\" head of sales at BZW Niaga Securities Adnan Tan
\nsaid.<\/p>\n
Another analyst said the heightened political climate
\napproaching the election in March to elect a new president and
\nvice president would put additional pressure on Indonesia's
\nfinancial and stock markets.<\/p>\n
\"But it's a common occurrence in every country. The market has
\nalready anticipated that,\" the analyst said.<\/p>\n
Barings' Laksono said the benchmark price index could touch
\ndown to 300 points in the near future on renewed political
\nworries in Indonesia's economy.<\/p>\n
\"I think Indonesia's economy will not recover in the near term
\nbut will take at least two or three years,\" he said.<\/p>\n
The JSX composite index rose 8.95 percent last week closing
\n37.06 points higher to 450.98 points from 413.92 the previous
\nweek.<\/p>\n
However, average total turnover declined 21 percent to 562.01
\nmillion shares last week from 719.73 million shares the previous
\nweek.<\/p>\n
The average total value also declined 11 percent to Rp 705.03
\nbillion (US$54.23 million) last week from Rp 797.67 billion the
\nprevious week.<\/p>\n
Stock brokers said the increase in the main price index did
\nnot necessarily prove that foreign investors had returned to the
\nlocal market.<\/p>\n
\"The rise in the index was caused by massive buying on
\nheavyweight stocks like PT Telkom,\" a broker said.<\/p>\n
\"Telkom shares are crucial to determine the direction of the
\nindex. We'll just see how Telkom shares perform this week,\" the
\nbroker said.<\/p>\n
Most blue-chip stocks were mixed last week with PT Telkom
\nrising Rp 325 to Rp 4,225 Friday while Indosat declined Rp 500 to
\nRp 16,000, Gudang Garam fell Rp 25 to Rp 10,000 and HM Sampoerna
\nlost Rp 425 to Rp 4,000. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/battered-rupiah-remains-a-barrier-to-stock-trading-1447893297",
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