Financial market calm over next Cabinet lineup<\/p>\n
By Berni K. Moestafa<\/p>\n
JAKARTA (JP): The bullish mood in the financial market will
\nlikely continue this week despite the daunting task awaiting
\nPresident Megawati Sukarnoputri's new Cabinet.<\/p>\n
Currency and stock analyst Feri Latuhihin at PT Danareksa
\nSekuritas said speculation over the possible return of the
\nIndonesian Democratic Party of Struggle's (PDI-P) top economists
\nKwik Kian Gie and Laksamana Sukardi to the Cabinet would bring
\nfresh hope to the market.<\/p>\n
\"We're familiar with PDI-P's economists. The market knows the
\nintegrity of Kwik and Laksamana,\" he told The Jakarta Post over
\nthe weekend.<\/p>\n
Vice President Hamzah Haz said on Friday the next Cabinet
\nwould consist mainly of politicians to ensure political support
\nfor the new government.<\/p>\n
He also hinted the return of PDI-P politicians Kwik and
\nLaksamana, saying they were fit for ministerial posts.<\/p>\n
Under former president Abdurrahman Wahid's administration,
\nKwik and Laksamana served as coordinating minister for the
\neconomy and minister of investment and state enterprises
\nrespectively.<\/p>\n
Abdurrahman dismissed Laksamana in April last year on
\ncorruption charges that were never taken to court.<\/p>\n
Kwik gave way to Rizal Ramli, when he resigned in August
\nover the former president's plan to reshuffle his Cabinet.<\/p>\n
Kwik, a noted economist, was known as a weak administrator,
\nbut his integrity earned him Abdurrahman's praise for being an
\nhonest and hardworking man.<\/p>\n
Both Kwik and Laksamana have been Megawati's closest aides on
\neconomic affairs and their ouster had marked the first blow to
\nAbdurrahman's alliance with then vice president Megawati.<\/p>\n
\"I think their return would bring a positive impact to the
\nmarket,\" Feri continued.<\/p>\n
He added market talks also included the return of former
\nfinance minister Bambang Sudibyo, who was ousted in the August
\nreshuffle last year.<\/p>\n
Bambang entered the Cabinet to appease the Axis Force, a loose
\ncoalition of Islamic parties, to whom Abdurrahman owed much for
\nhis presidency.<\/p>\n
\"There isn't much concern over the non-economic posts in the
\nCabinet, the market is largely indifferent to who will sit in
\nthese posts,\" Feri continued.<\/p>\n
He said the recent Cabinet rumors eased some of the fear that
\npolitical horse-trading would stifle economic reform.<\/p>\n
Economists have argued that the ongoing political instability
\nunder Abdurrahman's 20-month rule is behind Indonesia's slow-
\npaced economic recovery.<\/p>\n
Feri said to accelerate recovery, the new Cabinet should focus
\non the budget deficit, debt restructuring and the International
\nMonetary Fund (IMF).<\/p>\n
If the new economic team fell in line with market
\nexpectations, he said, the rupiah could rise to 9,800 to the U.S.
\ndollar.<\/p>\n
Relieved by the peaceful elevation of Megawati to the
\npresidency, the market took profits on the dollar in last week's
\ntrading.<\/p>\n
After hitting a four-month high last Monday, the rupiah closed
\nlower at 10,000 on Friday, yet far above the previous week's
\n11,148.<\/p>\n
Corporate demand for the dollar would cap any further gains,
\nas some US$2.5 billion in foreign debts would mature in
\nSeptember, Feri added.<\/p>\n
He said, at 10,000, the rupiah was already too tempting for
\ncompanies.<\/p>\n
\"I expect trading next week to range between 9,800 and
\n10,000,\" he said, noting that the present thin market would make
\nthe rupiah vulnerable to the slightest rise in corporate demand.<\/p>\n
Separately, stock analyst Adrian Rusmana at PT BNI Securities
\nsaid the market was expecting several members of Abdurrahman's
\nfirst economic team to return.<\/p>\n
\"As in the first Cabinet of Gus Dur, the next one is aimed at
\nmaking everybody happy,\" Adrian said, referring to the former
\npresident by his more popular nickname.<\/p>\n
Some believe Abdurrahman's frequent reshuffling of his Cabinet
\nhad undermined the political support necessary for his government
\nto survive.<\/p>\n
Adrian said the stock index could rise to around 450 to 460 on
\nnews of a politically strong government with a competent economic
\nteam.<\/p>\n
According to him, the market was already undervalued as many
\nhad taken profit from Megawati's presidency last Monday.<\/p>\n
Stock investors had long bet on her presidency, which Adrian
\nsaid was evident in the stock market's past three-month rise.<\/p>\n
\"Now, some blue chip companies are oversold, they're poised to
\nget stronger,\" he said, citing shares of telecommunication,
\nretail firms and cigarette producers.<\/p>\n
He said the undervalued market, coupled with the confidence of
\na solid economic team was sure to send the stock index
\nrebounding.<\/p>\n
On last week's trading, the Jakarta Stock Exchange (JSX)
\nComposite Index fell to 447.38 from 460.91 the week before.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/financial-market-calm-over-next-cabinet-lineup-1447893297",
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