Positive sentiments to boost JSX<\/p>\n
JAKARTA (JP): The stock market is poised for more gains in
\nthis week's trading as investors rush in amid growing confidence
\nthat the upcoming People Consultative Assembly special session
\nwill bring fresh hope for the resolving of the country's
\npolitical problems.<\/p>\n
Investment analyst Erwin S. Widjojo of PT Indovest Securities
\nsaid confidence was running high that the Assembly's special
\nsession could restore political stability to the country.<\/p>\n
\"The Assembly session carries with it the hope of political
\nchange, a return to stability,\" Erwin told The Jakarta Post.<\/p>\n
Although the Assembly is unlikely to convene earlier than
\nschedule in August, most investors have decided to enter early,
\nhe said. They were snatching up shares before any possible market
\neuphoria erupted after the Assembly session.<\/p>\n
He said that others who feared missing out on the potential
\ngains had already jumped in further contributing to last week's
\ngains in the market index.<\/p>\n
Over the past two weeks the index has been on a steady upwards
\npath led by gains in blue chip shares. The Jakarta Stock Exchange
\n(JSX) Composite Index closed the week at 437.59, up from 417.56
\nin the previous week, and from 398.81 the week before.<\/p>\n
Erwin said the prospect of making gains after the session had
\nencouraged many players to invest despite the as yet unstable
\npolitical landscape.<\/p>\n
The decision to hold the special session, with the likely
\noutcome of the president's impeachment, did lend some certainty
\non the political front.<\/p>\n
The Assembly will demand that President Abdurrahman Wahid
\naccount for his alleged involvement in two financial scandals.<\/p>\n
President Abdurrahman maintains his innocence.<\/p>\n
Countermoves by the President to thwart his foes and to
\nprevent his ouster have come to naught so far. The market is
\nstill awaiting the political impact of the sudden cabinet
\nreshuffle two weeks ago.<\/p>\n
The most striking moves so far have come from newly appointed
\nAttorney General Baharuddin Lopa as he clamped down on corruption
\ncases implicating political foes of the President.<\/p>\n
Erwin also believed that foreign investors had reentered the
\nmarket as was indicated by the sharp rise in transaction values.<\/p>\n
He doubted that local players could have caused transaction
\nvalues to have more than doubled over the past few days.<\/p>\n
\"But it's too early to confirm to what extent they (the
\nforeign investors) have returned, I don't think they're the big
\ninvestment houses,\" he said.<\/p>\n
He said the government could also have intervened in the stock
\nmarket to encourage foreign investors to return.<\/p>\n
This could mean buying up shares in state telecommunications
\nfirms PT Telkom and PT Indosat so as to make it appear that their
\nshares were being actively traded and promising, he explained.<\/p>\n
Propping up Telkom and Indosat's shares would be in line with
\nthe efforts to seek strategic partners for the two companies as
\npart of the government's divestment program.<\/p>\n
Besides a push from the political front, most investors also
\nexpect the index to gain on a technical rebound, he went on.<\/p>\n
\"In the months of August and September, we usual see a
\ntechnical rebound ... people buy now while its cheap and with a
\nbit of patience their investment will pay off,\" he said.<\/p>\n
Blue chip shares were the most sought after, but firms that
\nhad recently announced plans to pay out dividends were also being
\ntargeted, he added.<\/p>\n
Erwin predicted that the JSX index would maintain its upward
\ntrend, with the possibility of breaking the 450 level.<\/p>\n
Elsewhere, PT Bhakti Investama senior vice president Budy
\nRuseno concurred with Erwin, saying the potential for more gains
\nin the index were high.<\/p>\n
A combination of political developments and corporate news
\nwould drive the market this week, he predicted.<\/p>\n
\"The market is optimistic about a solution that will end the
\ncurrent political impasse,\" Budy said.<\/p>\n
He said that even if the special session triggered clashes
\nbetween pro and anti President Abdurrahman mobs, most investors
\nwere upbeat that the violence would be only temporary.<\/p>\n
Budy recommended buys for shares in the cigarette, retail and
\ntelecommunications sectors, and those in the Astra Group.<\/p>\n
For this week's trading, he saw the index resistance level
\nbeing 440, where investors are prone to profit-taking.<\/p>\n
But according to Budy, the market shows good prospects of
\nbreaking that level and hitting 460, though probably not this
\nweek.<\/p>\n
In the money market, the rupiah has maintained its tight
\ntrading band, but dipped to 11,300 against the U.S dollar
\nfollowing a series of violent protests against the new fuel
\nprices.<\/p>\n
The local unit closed last Tuesday's trading at 11,380, down
\nfrom 11,280 the day before, on news of continued violent
\nprotests.<\/p>\n
The government's move to hike fuel prices by an average of 30
\npercent led to a week of nationwide protests, some of which
\nturned violent.<\/p>\n
Overall, trading was quiet as most players preferred to wait
\nout the political uncertainties before taking up positions.<\/p>\n
Analysts said this trading mood was likely to prevail, with
\nthe rupiah likely to strengthened slightly in the run up to the
\nAssembly's special session on speculation of a new president
\nbeing appointed.<\/p>\n
But they also warned that corporate demand for the dollar
\nremained high in the long run as many companies had foreign debt
\npayments to meet.<\/p>\n
The rupiah closed last week's trading at 11,355, much lower
\nthan the previous week's close of 11,247.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/positive-sentiments-to-boost-jsx-1447893297",
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