Brokers say IMF loan delay likely to hit stock market<\/p>\n
JAKARTA (JP): Trading activities on the Jakarta Stock Exchange
\n(JSX) are likely to remain gloomy this week on news that the
\nInternational Monetary Fund (IMF) will postpone the disbursement
\nof its US$3 billion second tranche loan package for Indonesia,
\nstock analysts and brokers have said.<\/p>\n
They said over the weekend a report on the delay would
\ncertainly further deteriorate the investors' sentiment in the
\nlocal markets which would prompt them to stay away from the
\ncountry's paralyzed market.<\/p>\n
\"The delay will further deteriorate the market sentiment
\nbecause the IMF loan is expected to increase market confidence in
\nthe government's economic reforms,\" said an analyst with a joint-
\nventure securities.<\/p>\n
He said that Indonesia was in need of IMF aid because it would
\nsupport the government's plan in implementing economic reforms
\nand stabilize the rupiah.<\/p>\n
The rupiah closed at 10,400 against the dollar last week, off
\na low of Rp 12,000 to the dollar and down 23 percent from the
\nprevious week's close of Rp 8,950.<\/p>\n
The rupiah has lost by about 70 percent of its value against
\nthe greenback from its level of Rp 2,450 in July last year.<\/p>\n
\"The delay will also put more pressures on the rupiah,\" said
\nEdwin Syharuzad, an analyst with Pentasena Securities.<\/p>\n
He said, however, that the market had anticipated the delay
\ngiven the fact that the Indonesian government was to go ahead
\nwith a plan opposed by the IMF.<\/p>\n
\"So, the delay is not big news to the local stock market,\" he
\nsaid.<\/p>\n
Eddy Widjoyo, an analyst with Mashill Jaya Securities said
\nthat Indonesia's plan to adopt the controversial currency board
\nsystem, for example, has intensified hackles between Indonesia
\nand the IMF and G-7 members.<\/p>\n
Another analyst with a joint-venture securities said that the
\nIndonesian government was in desperate need to adopt a system
\nto shore up rupiah's value against the dollar, make imports
\ncheaper and help local corporate pay off their mounting debts in
\nrupiah terms.<\/p>\n
\"But the IMF has threatened to halt the continuation of the
\naid package if Indonesia goes ahead with a currency board
\nsystem,\" the analyst said.<\/p>\n
\"This is really a big dilemma for the country,\" Eddy said.<\/p>\n
On Friday, the IMF said its board would not discuss
\nIndonesia's economic reform program before April, effectively
\ndelaying a $3 billion payment expected by March 15.<\/p>\n
It said there was a need for its review team to discuss
\nchanges in \"a few macroeconomic functions\" with the new cabinet
\nto be appointed following President Soeharto's reelection by the
\nPeople's Consultative Assembly on March 11.<\/p>\n
The IMF made its first $3 billion disbursement of the total
\n$43 billion in assistance package in November last year, with
\na second disbursement due on March 15.<\/p>\n
Analysts said that IMF's announcement would kill the market
\nsentiment, though Minister of Finance Mar'ie Muhammad expressed
\noptimism on Friday that the IMF would meet the March 15 deadline
\nfor the disbursement of the $3 billion second tranche loan.<\/p>\n
But Mar'ie also warned that a delay would damage confidence
\nand \"have a negative impact on efforts to strengthen and to
\nstabilize currencies in Southeast Asia\".<\/p>\n
\"Such a contradictory news report will make the market remain
\nuncertain,\" Edwin said.<\/p>\n
\"If the market is uncertain, foreign investors will not stay
\nlong in the local market,\" said Bruce Rolph, head of equities of
\nBahana Securities.<\/p>\n
Most stock analysts shared the view that the country's ailing
\neconomy might be further eroded if the government did not come up
\nwith clear-cut measures in the coming weeks to improve the
\nwrecked economy.<\/p>\n
They said that although trading activities on the local stock
\nexchange remain bleak this week, several investors would take the
\nbenefit from a further drop in the rupiah to buy blue-chip shares
\nsuch as Telkom, Indosat and Tambang Timah, which are cross listed
\nin New York and London.<\/p>\n
\"I think foreign investors will make massive buys on these
\nstocks when the rupiah declines against the dollar,\" Edwin said,
\npointing out that they would benefit from the price differential
\nin the domestic and foreign market of the stocks.<\/p>\n
\"The three stocks accounted for about 40 percent of market
\ncapitalization in the local exchange,\" Eddy said.<\/p>\n
The JSX Composite index closed 29.86 points or 6.1 percent
\nhigher last week to 512.23 from 482.86 the previous week.<\/p>\n
Total average daily turnover fell by 8 percent to 569.14
\nmillion shares last week from 623.77 million the previous week.<\/p>\n
However, the total average daily value rose by 7.4 percent to
\nRp 684.88 billion last week from Rp 637.69 billion the previous
\nweek.<\/p>\n
State-owned telecommunications firm Telkom rose by Rp 475 to
\nRp 3,975, while satellite operator Indosat rose by Rp 1,925 to Rp
\n14,650, Tambang Timah by Rp 1,500 to Rp 9,050, cigarettemaker
\nSampoerna by Rp 1,075 to Rp 6,175 and Gudang Garam by Rp 1,600 to
\nRp 12,650. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/brokers-say-imf-loan-delay-likely-to-hit-stock-market-1447893297",
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