President's call may help ailing stocks<\/p>\n
JAKARTA (JP): President Soeharto's instruction to state-owned
\ncompanies to boost their portfolio investments will help restore
\nthe ailing stock market, said securities analysts.<\/p>\n
\"It is really good news for investors. I think it will help
\nbring back the buying impetus,\" vice president of Mashill Jaya
\nSecurities Tjandra Kartika told The Jakarta Post Saturday.<\/p>\n
He said although it will take several days for the state-owned
\ncompanies to comply with the President's instruction, the impact
\nof the order will be psychologically significant enough to renew
\ntrading activities.<\/p>\n
On Friday, Soeharto instructed state-owned companies to
\nallocate at least 1 percent of their profits to buy shares on the
\nlocal stock market to help restore the weak trading activities.<\/p>\n
The President has also instructed the monetary authorities to
\nuse the US$5 billion standby loan from Singapore as low-interest
\ncredits to improve the liquidity of big and medium companies.<\/p>\n
Tjandra said with a total profit of about Rp 6 trillion
\n(US$1.7 billion) last year, the country's state-owned companies
\nwould have about Rp 60 billion to buy stocks.<\/p>\n
\"Such an amount is still small compared to the current market
\ncapitalization of around Rp 150 trillion,\" he said. \"But it will
\nbring much help.\"<\/p>\n
There are around 178 state-owned companies operating in
\nIndonesia.<\/p>\n
A stock dealer with BZW Niaga Securities firms also estimated
\nstock prices would gain ground on the back of the President's
\ncall.<\/p>\n
She estimated that funds from these state companies would be
\nused to buy undervalued stocks such as those of Bank Negara
\nIndonesia, Telkom, Indosat, Tambang Timah.<\/p>\n
Indonesia's Jakarta Stock Exchange (JSX) Composite Index has
\ndeclined by almost 45 percent from its peak on July 7 to as low
\nas 391.25 points on Friday. At least 70 shares have declined
\nbelow their par value of Rp 500.<\/p>\n
The Composite Index broke the psychological barrier of 400-
\npoint level last week on a combination of regional weakness,
\ncurrency crisis and lack of confidence in the country's financial
\nand capital market.<\/p>\n
The President's instruction was, therefore, timely to bring
\nback the buying mood because without such a move, the bearish
\ntrading would continue.<\/p>\n
\"In general, the Indonesian stock market is far from
\nrecovering ... it is predicted to continue with its downward
\ntrend,\" Asia Equity's Robert Allison said over the weekend.<\/p>\n
\"With the current situation, in which the share price index
\ncontinues falling, no one will fill a buy order. This will make
\ninvestors more scary,\" Harita Securities president Christina Lim
\nsaid.<\/p>\n
The analysts said that without a bailout measure, the JSX
\nComposite Index could further plunge to below the 350 level
\nbecause the market fundamentals remained very weak.<\/p>\n
The unfavorable conditions in other regional markets and the
\nlack of foreign presence would make the local trading even worse,
\nthey said.<\/p>\n
\"There is hardly any foreign institutional investors in the
\nstock market. They have long shifted their focus from this
\nregion,\" Mashill's Edi said.<\/p>\n
The JSX Composite Index fell 10.9 percent, or 45.593 points
\nlast week to close at 391.258 in generally quiet trading. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/presidents-call-may-help-ailing-stocks-1447893297",
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