JSX to continue upward movement: Analysts<\/p>\n
JAKARTA (JP): Equity analysts said the Jakarta Stock Exchange
\n(JSX) Composite Index would stay above the 500-point level this
\nweek as more investors -- shrugging off concerns over political
\ninstability sparked by feuds among elite politicians -- would
\ntake a bullish view of the market.<\/p>\n
They said the detention of Bank Indonesia Governor Sjahril
\nSabirin by the Attorney General's Office, perceived by many as
\nhaving political motives, only temporarily weighed on the JSX
\nmid-last week as investors reentered the market for relatively
\ncheap shares across the board.<\/p>\n
\"Investors have turned their eyes to the economic stories.
\nThey see cheap share prices, yet good performances,\" one analyst
\nsaid.<\/p>\n
Budi Ruseno of Bhakti Investama agreed that the Composite
\nIndex was bolstered last week as investors were happy with good
\nnews released during last week by a number of companies following
\ntheir annual shareholders' meeting.<\/p>\n
He said further announcements would support the market's
\nrebound this week as many of the firms were expected to have
\npositive news to announce.<\/p>\n
He forecast the Composite Index would range between 505 points
\nand 530 points this week.<\/p>\n
The JSX Composite Index gained 4 percent last week to close at
\n503.14 points, compared to 484.02 points the previous week.<\/p>\n
The daily average transaction value increased to Rp 543.08
\nbillion last week, compared to Rp 459.36 billion the previous
\nweek.<\/p>\n
The daily average turnover also increased to 614.37 million
\nshares from 347.84 million shares the previous week.<\/p>\n
\"The market will be sensitive about the positive news,
\nparticularly from large corporations next week,\" Budi said last
\nFriday.<\/p>\n
Such announcements are a reflection of corporate activities
\nwhich are seen be investors as a clear message that the country's
\neconomy was running fine, despite the still ailing banking
\nsector.<\/p>\n
Numerous corporations hold their annual shareholders' meetings
\nthroughout June, with some announcing dividend payments,
\nperformance as well as plans and other commitments.<\/p>\n
An analyst from a local securities firm said it was fair to
\nsay that the market would down play the domestic political issues
\nnext week as things have seemed to settled down under President
\nAbdurrahman Wahid's hand.<\/p>\n
\"President Abdurrahman seems to have control over the
\npolitical battle out there. The detention of Sjahril Sabirin
\ncould mean an end to the standoff between them, with Abdurrahman
\ncoming out the winner,\" he said.<\/p>\n
Budi said issues concerning a hike in domestic interest rates
\nwould not weigh on the equity market as investors believed the
\nmagnitude of the hike would not be so significant as to burden
\nthe government in servicing its bank recapitalization bonds.<\/p>\n
\"We are talking about an insignificant hike in interest rates,
\nsomewhere much lower than 25 basis points. It will give positive
\neffects to the equity market rather than weigh on it,\" he said.<\/p>\n
He said if the rate hike was significant it would make the
\nequity market correct itself as some of the investors might cash
\nin some of their stock holdings and migrate to higher bank
\ndeposits.<\/p>\n
With an insignificant increase in the interest rate, the
\nrupiah is expected to be much stronger, thus inducing more market
\nconfidence.<\/p>\n
Sharing a similar view with Budi, another analyst from a state
\nsecurities house said the JSX Composite Index was more sensitive
\nto developments in U.S. dollar interest rates.<\/p>\n
The same thing applies to the regional bourses in Asia.<\/p>\n
\"The market has yet to be more assured that the U.S. Federal
\nReserve will really stop raising its interest rates in its late
\nJune meeting over the country's overheating economy,\" he said.<\/p>\n
Unlike the stock market, the rupiah has not fared well this
\npast week and many dealers expect that the Indonesian currency
\nwill remain weak this week due to the lingering domestic
\npolitical instability and weak regional currencies.<\/p>\n
A dealer from a Singaporean joint venture bank said the rupiah
\nhad a gloomy outlook for this week, hovering within a tight
\ntrading range of 8,650 and 8,750 per U.S. dollar.<\/p>\n
\"The detention of Sjahril Sabirin and another round of
\nquestioning of former president Soeharto by the Attorney
\nGeneral's Office will undermine the rupiah next week,\" the dealer
\nsaid over the weekend.<\/p>\n
He speculated that the rupiah would, however, be kept in a
\nsafe range and that it would not breach its current resistance
\nlevel of 8,750 as state banks would most likely continue
\ndefending the rupiah in the market like they did last week.<\/p>\n
\"Something that is most feared by dealers -- the rupiah being
\nweaker than the important psychological level of 9,000 -- will
\neasily happen if the rupiah breaches its current 8,750 resistance
\nlevel,\" the dealer warned.<\/p>\n
The rupiah nowadays reacts quickly to bad news on one hand,
\nbut hesitates to respond to positive news on the other, he said.<\/p>\n
\"The only positive news for next week will be the agreement of
\nthe loi (letter of intent) to the IMF (International Monetary
\nFund) and the possible upgrading of Indonesia's credit rating,\"
\nhe said.<\/p>\n
The rupiah lost 1.3 percent of its value last week to close at
\nRp 8,685 against the U.S. dollar, compared to Rp 8,570 the
\nprevious week, due to political reasons. (udi)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jsx-to-continue-upward-movement-analysts-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}