IMF talks outcome crucial for trading activities<\/p>\n
JAKARTA (JP): The nature of this week's trading on the Jakarta
\nStock Exchange (JSX) will depend much on the outcome of the
\nInternational Monetary Fund's (IMF) review of Indonesia's
\neconomic reform program, securities analysts believe.<\/p>\n
Analysts said that if the ongoing talks between the IMF team
\nand the government over the country's reform program produced
\npositive results, the market sentiment's trend would undoubtedly
\nbe bullish.<\/p>\n
But they added that if the outcome of the talks resulted in a
\nfurther delay in the disbursement of the US$43 billion rescue
\nfund, the market would react negatively.<\/p>\n
Aside from all the IMF-related permutations, most stock
\nanalysts and brokers said the main index increased so drastically
\nlast week (4.09 percent), it would be impossible to continue the
\nupward trend this week.<\/p>\n
IMF officials have been here for two weeks reviewing the
\nimplementation of the economic reforms introduced in January in
\nexchange for an IMF-led US$43 billion bailout package.<\/p>\n
The results of the review will be used to decide whether
\nIndonesia has qualified for the second $3 billion tranche which
\nwas delayed due to allegations that the government was not
\nserious about implementing the IMF-reforms.<\/p>\n
The country received the first $3 billion tranche in October
\nlast year.<\/p>\n
\"If IMF agrees to disburse the second tranche this week,
\nforeign investors' confidence in the local market will improve,\"
\nMashill Jaya Securities' research director, Tjandra Kartika,
\nsaid.<\/p>\n
If the government and the IMF team reach a deal, it would not
\nonly mean that Indonesia would receive fresh funds to help
\nrestimulate the battered economy but would also mean that the
\ncountry's private sector would receive much-needed help to settle
\ntheir mounting offshore debts.<\/p>\n
\"The market will, therefore, deserve strong attention from
\ninvestors,\" one analyst said.<\/p>\n
Last week, IMF officials agreed to Indonesia's proposal to
\nadopt the Mexican model to reduce the US$73.70 billion overseas
\ndebt owed by the country's private company's.<\/p>\n
The downward trend in interest rates should also be an
\nincentive to buy stocks this week.<\/p>\n
\"This week we will have many incentives to buy stocks, not
\nonly due to the encouraging signals from the IMF's talks but also
\nthe downward trend in interest rates,\" Christina Lime of Harita
\nSecurities said.<\/p>\n
Analysts say that lowering domestic bank interest rates would
\nalso encourage more investors to put more funds into the equity
\nmarket rather than in banks' time deposits.<\/p>\n
State and private banks, which raised deposit rates to as high
\nas 67 percent last Monday, agreed Thursday to lower the rates to
\nreduce costs.<\/p>\n
The Indonesian state and private banks agreed to set new rates
\nat a maximum of 47.5 percent for one-month deposits, 31.5 percent
\nfor three-month deposits, 21 percent for six-month deposits and
\n19 percent for one-year deposits.<\/p>\n
\"Even so, most investors base their investment on market
\nsentiment rather than on fundamentals,\" Joko Santoso, an analyst
\nwith GK GOH Ometraco said.<\/p>\n
Most analysts said that the likely positive outcome of the IMF
\ntalks, which is expected to be announced this week, would also
\nstrengthen the ailing rupiah.<\/p>\n
The rupiah, which has lost about 70 percent of its value since
\nthe crisis first hit the country in July, reached its lowest
\nlevel of 17,000 to the U.S. dollar in January.<\/p>\n
Last week, the rupiah showed some strength, hovering between
\n9,500 to 8,500 against the greenback.<\/p>\n
The Jakarta Stock Exchange's Composite Index rose 25.367
\npoints to 542.09 last week from 516.72 the previous week.<\/p>\n
Daily average turnover rose 59 percent to 826.30 million
\nshares changing hands last week from 594.21 million the previous
\nweek.<\/p>\n
Daily average value was Rp 915.75 billion (US$107.73 million)
\nlast week from Rp 512.40 billion the previous week.<\/p>\n
Most blue-chip stocks ended higher last week with state-owned
\ntelecommunication PT Telkom rising Rp 200 to Rp 4,250, satellite
\noperator Indosat Rp 850 to Rp 13,600 and Gudang Garam Rp 50 to Rp
\n11,900.<\/p>\n
The stock market would be closed tomorrow to mark the closing
\nof the 1997\/1988 fiscal year. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-talks-outcome-crucial-for-trading-activities-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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