Index expected to rebound this week<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
As the overall market sentiment remains positive, the Jakarta
\nComposite Index is expected to return to its upward trend this
\nweek, after the Telkom fiasco disrupted the trend last week, a
\nstock analyst said.<\/p>\n
Adrian Rusmana, head of researcher at BNI Securities, said in
\nits weekly stock assessment that the index had the potential to
\nreach 520 points this week, rebounding from last week's trading
\nwhich saw the index decline to 510.48 points.<\/p>\n
The index broke the 520 mark in mid-week -- thanks to the
\noverall positive sentiment in the market boosted by stronger
\nrupiah and continued cuts in Bank Indonesia's benchmark interest
\nrate -- but faltered later following Telkom's audit report
\nproblems with a U.S.-based financial watchdog.<\/p>\n
The company had its 2002 financial report rejected by the U.S.
\nSecurities and Exchange Commission (SEC) -- leading to a
\ntemporary suspension of the company's stock on the New York Stock
\nExchange -- because the audit was conducted by a firm that is not
\naccredited by the SEC.<\/p>\n
However, upon hearing the company's pledges that it would
\ncomply with the ruling, the SEC allowed Telkom to resume trading
\non Friday.<\/p>\n
This, coupled with continued good sentiment, will likely push
\nthe index higher.<\/p>\n
"The correction should not be responded to with panic by
\ninvestors. This could be a positive indicator for the index to
\ntake a breath before extending its rally, which began in March,"
\nAdrian said.<\/p>\n
"It has the potential to reach 520 points."<\/p>\n
The index closed last week at 510.48, with the daily average
\nvalue standing at Rp 588.5 billion (US$71.7 million).<\/p>\n
Active buying will not only be limited to blue-chip shares but
\nwill also affect second-liners, including banking stocks, which
\nhave caught the attention of investors ahead of the government's
\nplans to offer a 15 percent stake in Bank Mandiri on the stock
\nmarket.<\/p>\n
Meanwhile in the currency market, the rupiah is expected to
\nstrengthen this week within a narrow range, rebounding from last
\nweek's decline caused by profit-taking moves.<\/p>\n
"Heavy profit-taking slowed down the rupiah's movement last
\nweek. But since expectations for continued capital inflow remain
\nhigh, I think the rupiah will bounce back this week, maybe to a
\nlevel slightly below 8,200," a currency dealer from a local bank
\nsaid on Sunday.<\/p>\n
The local unit ended last week's trading weaker at 8,225 per
\ndollar, compared to 8,180 the week before.<\/p>\n
Amid the absence of fresh news that could shake the current
\npositive sentiment, investors would still expect more capital
\ninflow to buy local assets being offered under the privatization
\nand divestment programs. This would increase the chance for the
\nrupiah to strengthen, the dealer said.<\/p>\n
Since early this year, the local unit has appreciated close to
\n10 percent against the faltering greenback, making it the best
\ncurrency performer in the region.<\/p>",
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