Rating cut sends negative signal on share trading<\/p>\n
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
\nwill likely lose footing this week after a slight recovery in the
\nprevious week.<\/p>\n
Securities analysts said Standard and Poor's decision to lower
\non Saturday Indonesia's long-term foreign currency rating to
\ntriple-'B'-minus from triple-'B' would send a negative sentiment
\nto stock trading.<\/p>\n
"The cut in the sovereign rating is really bad news to the
\nmarket, which last week had started to recover after persistent
\ndrops," an analyst said. He added that the hardest hit would
\ninclude blue chips Bank BNI and H.M. Sampoerna, whose long-term
\nforeign currencies were also lowered as a result of the cut in
\nthe Indonesian sovereign rating.<\/p>\n
The government's announcement last week to seek financial aid
\nfrom the International Monetary Fund (IMF) had helped restore
\npublic confidence. Both the rupiah and share prices gained ground
\nafter persistent drops as investors believed the IMF financial
\npackage would help mend the country's financial crisis.<\/p>\n
They, however, said that Standard and Poor's announcement
\nwould again turn the upward market direction downward at least
\nuntil the government received a firm commitment from the IMF
\nabout its aid package.<\/p>\n
"The IMF package will clearly become the dominant factor to
\ndetermine the market as it has the potential to enliven it," an
\nanalyst with a joint brokerage firm said.<\/p>\n
"I think the only thing the market needs now is real action
\ntaken by the IMF to restore Indonesia's economy ... which is
\nstill unknown so far," Adnan Tan, sales director of BZW Niaga
\nSecurities, said.<\/p>\n
High-ranking IMF officials are expected to begin discussing
\nthe financial package here on Monday.<\/p>\n
However, other analysts said that the impact of the proposed
\nfinancial package would be short-term.<\/p>\n
"The positive impact of the much talked about IMF aid will be
\nshort-lived because the overall condition of the monetary market
\nremains tight... Interest rates are still high," vice president
\nof Mashil Jaya Securities Tjandra Kartika told The Jakarta Post.<\/p>\n
Financial performances of most publicly listed companies were
\nnot as promising as expected, he said. Many companies had lowered
\nearning projections due to the ongoing currency crisis.<\/p>\n
"I think most companies will suffer great losses in the third
\nquarter due to foreign exchange losses and the currency turmoil,"
\nTjandra said.<\/p>\n
Last week, both rupiah and share prices showed improvement
\nafter persistent drops.<\/p>\n
The rupiah, which broke the 3,850 level again the U.S. dollar
\nin the first week of this month, further strengthened last week
\nto close at 3,355.65 against an opening of 3,470\/90.<\/p>\n
Currency dealers expected the currency would further
\nstrengthen to between 2,950 and 3,100 in the opening market this
\nweek.<\/p>\n
As the currency market strengthened, the stock market also
\nbore fruit marked with the increasing JSX composite index.<\/p>\n
The JSX composite index rose 3.7 percent or 19.275 points last
\nweek to close at 534.75.<\/p>\n
Total daily average turnover rose almost 55 percent to 432.20
\nmillion shares in the regular market last week compared to 277.40
\nmillion shares in the previous week.<\/p>\n
While total daily average value rose 38 percent to Rp 493.33
\nbillion (US$136.7 million) last week against Rp 357.08 billion
\nrecorded in the previous week.<\/p>\n
Most big capitalized stocks made substantial gains last week
\nwith state-telecommunications firm PT Telkom rising Rp 250 to Rp
\n3,700 while satellite operator Indosat by Rp 500 to Rp 9,000,
\ncigarette-maker HM Sampoerna gained Rp 100 to Rp 5,800, Bank
\nInternasional Indonesia by Rp 100 to Rp 875, Bank Negara
\nIndonesia climbed Rp 50 to Rp 850 and Bank Dagang Nasional
\nIndonesia gained Rp 25 to Rp 625. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/rating-cut-sends-negative-signal-on-share-trading-1447893297",
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