Fresh loan commitment will not boost trade in local stocks<\/p>\n
JAKARTA (JP): Trading activities on the local stock market are
\nexpected to remain flat this week despite the signing of the
\nUS$1.5 billion loan agreement with the Asian Development Bank
\n(ADB) and a new accord with the International Monetary Fund
\n(IMF), stock analysts and brokers said.<\/p>\n
They said that even though the two agreements were positive in
\nnature, they would not be able to immediately improve investor
\nsentiment toward the country's battered market.<\/p>\n
The Asian Development signed a $1.5 billion loan accord with
\nthe Indonesian government Friday to finance the country's budget
\ndeficit and strengthen the balance of payments following an
\naccord signed between the IMF and the Indonesian government the
\nprevious day.<\/p>\n
But the IMF executive board has yet to confirm the
\ndisbursement of the next $1 billion tranche; its decision is
\nexpected in the middle of next month.<\/p>\n
The IMF has already disbursed $4 billion out of its $10
\nbillion commitment, which is part of the total $43 billion
\nbailout package pooled together by the IMF, ADB, World Bank and
\nother major donors.<\/p>\n
Head of research of SG Securities Indonesia Goei Siauw Hong
\nsaid that despite such positive news, offshore fund managers
\nremained cautious over the country's political and social
\nuncertainty.<\/p>\n
\"The country is not only struggling to fight against the
\neconomic crisis but political crisis too,\" he said pointing out
\npolitical measures introduced by the government so far had not
\nyet borne any fruit.<\/p>\n
He said that the country's macro-economic outlook with
\ninflation predicted to skyrocket to 85 percent and economic
\ngrowth at minus 15 percent this year would further discourage
\nforeign investors from flocking to Indonesia.<\/p>\n
\"Indonesia's problems are so huge that it has to address both
\neconomic and political crises at the same time,\" he said.<\/p>\n
Head of research of Mashill Jaya Securities Tjandra Kartika
\nshared Hong's view, saying that the country's efforts to escape
\nfrom of its dire economic predicament were being hampered by
\nmounting concern over political and social instability at home.<\/p>\n
\"Investors gave a cool response to the two accords last week
\nbecause they still have fears over the country's political and
\nsocial uncertainty,\" he said.<\/p>\n
Rupiah<\/p>\n
The rupiah remained weak closing at 14,800 on Friday, 400
\npoints lower than the previous close at 14,400 and stock prices
\non the local exchange remained relatively unmoved last week.<\/p>\n
\"This indicates that foreign investors are not impressed with
\nthe progress in the country's political situation,\" he said.<\/p>\n
He said that fears over possible social unrest due to soaring
\nunemployment and escalating prices of basic essentials would
\nfurther affect the country's economic outlook.<\/p>\n
Riot<\/p>\n
Reports late last week that dozens of rioters attacked and
\ndamaged a shopping center in Samarinda, East Kalimantan, after
\nhundreds of fishermen set fire on trawlers, warehouses and an
\noffice in Gabion, Medan, North Sumatra.<\/p>\n
\"Rising unemployment and higher prices will likely trigger
\nsimilar riots in the coming months,\" another analyst said.<\/p>\n
Another analyst said that certain local investors, mostly
\nethnic Chinese, who fled the country in May after massive riots
\nand looting in Jakarta, had not returned home yet because they
\nwere still unsure the country's political and social security.<\/p>\n
\"These people took between US$10 billion and $25 billion with
\nthem overseas,\" he said.<\/p>\n
Most stock brokers said that trading activities on the local
\nbourse would be quiet this week with most local investors placing
\norders for short-term speculative trading.<\/p>\n
\"Daily trading volumes and transactions will continue to
\ndecline to around Rp 100 billion now compared to Rp 500 billion
\nbefore the crisis began last year,\" a broker with a local
\nsecurities firm said.<\/p>\n
The JSX Composite Index closed 5.42 points or 1.2 percent
\nhigher at 430.87 last week from 425.45 points the previous week.<\/p>\n
But daily average turnover fell 24 percent to 182.97 million
\nshares changing hands last week from 242.42 million the previous
\nweek.<\/p>\n
Daily transaction value also fell sharply, by 50 percent, to
\nRp 161.39 billion (US$11.13 million) last week from Rp 325.61
\nbillion the previous week. (aly)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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