Jakarta stocks tip 1,000 before falling back<\/p>\n
Rendi A. Witular, The Jakarta Post\/Jakarta<\/p>\n
Driven by optimism of higher corporate earnings and a flow of
\nfresh capital from the bond market, the Jakarta stock market
\nsoared on Thursday to another record high, tipping the 1,000
\nlevel before inching down on profit taking.<\/p>\n
The Jakarta Composite Index ended higher by 11.499 points at
\n997.698, off an intraday high of 1,003.503 with a trading volume
\nof 4.50 billion shares worth Rp 2.84 trillion (US$315 million).<\/p>\n
Stock analyst Arwani Pranadjaja of Mandiri Securities said
\nimprovement in the investment ratings of several bluechip
\ncompanies along with a report that the government might lower
\ncorporate tax had fueled optimism on the trading floor for better
\ncorporate earnings next year.<\/p>\n
\"There are a lot of positive sentiments coming out for the
\ncorporate sector. The sentiments have outweighed technical fears
\nthat share prices in the market are already overbought,\" said
\nArwani.<\/p>\n
Standard & Poor's (S&P) has raised local currency ratings for
\na number of publicly listed companies, such as state-owned
\ntelecommunication company PT Telkom and its rival PT Indosat. S&P
\nraised the ratings for Telkom and Indosat by two notches to BB,
\ntwo levels below the investment grade.<\/p>\n
After the announcement, Telkom shares ended higher by Rp 100
\nto Rp 5,200 and Indosat unchanged at Rp 5,700.<\/p>\n
Movement in Telkom caused a great swing in the market, given
\nthe fact that it is the largest counter on the bourse with about
\n15 percent of the market's capitalization.<\/p>\n
The record high for the bourse will not only improve its
\nchances of becoming the best performing stock market in the
\nregion, but will also increase confidence in the country in the
\neyes of international rating agencies and investors.<\/p>\n
Although it is not a new issue for local investors, a
\nstatement by coordinating minister for the economy Aburizal
\nBakrie to foreign-based media in Laos that the government will
\nlower corporate tax next year from 30 percent to 25 percent to
\nboost investment has fueled positive sentiment for foreign
\ninvestors.<\/p>\n
Foreign investors, who account for more than 50 percent of the
\nflow of funds into the bourse, project better prospects for
\nlisted companies in anticipation of a stronger domestic
\npurchasing power next year.<\/p>\n
Arwani also said the surge in the index was also attributable
\nto the maturing of some Rp 1.8 trillion of government treasury
\nbonds this week, which had caused excess liquidity on the part of
\ninvestors.<\/p>\n
\"The liquidity has been absorbed mainly by the stock market.
\nThat is why the trading is so bullish,\" he said.<\/p>\n
Heriyanto Irawan, head for the newly set up Deutsche Verdhana
\nIndonesia Securities said the continuous improvements in the
\npolitical and macro environments were paving the way for a
\nleveraged equities recovery.<\/p>\n
\"Operating conditions have improved for both the public and
\nprivate sector... Factors hindering investment have started to
\nimprove and there is a more favorable banking sector to fund
\ninvestments,\" he said.<\/p>",
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