Share prices are expected to remain strong this week<\/p>\n
JAKARTA (JP): Trading on the Jakarta Stock Exchange (JSX) is
\nexpected to remain bullish this week as more foreign investors
\nare predicted to return to take advantage of the cheap prices.<\/p>\n
Analysts said that the government's decision last week to
\nscrap the 49 percent ownership limit imposed on foreign investors
\nwould trigger massive buying of blue chip shares.<\/p>\n
\"Previously, it was very difficult for foreign investors to
\nbuy blue chips because foreign ownership in those companies had
\nmostly reached the 49 percent level,\" one analyst said. \"It is
\nnow different, you can buy as much as you like,\" he added.<\/p>\n
Other analysts believed that the renewed trading activities of
\nthe blue chips would give a positive spillover to medium-sized
\nshares, which they said, had mostly been undervalued.<\/p>\n
\"Just look at the strong buying demand on Friday, most people
\nentered the market. Such a phenomena will return this week so
\npeople can benefit from the cheap prices,\" a dealer with a joint
\nventure brokerage firm said.<\/p>\n
\"The timing to scrap the 49 percent limit has generated a
\nnoticeable momentum,\" Setiatno Budiman of Arab Malaysian
\nSecurities told The Jakarta Post.<\/p>\n
On Friday, the composite index made its largest intra-day gain
\never, rising 60.24 points, or 11.28 percent, to close at 594.11
\nagainst the previous week's close of 493.96 points.<\/p>\n
It was the third consecutive daily gain, after weeks of
\ndecline.<\/p>\n
The battered bourse began recovering Wednesday as investors
\nreacted positively to the government's steps to arrest the
\nnegative impact of the rupiah upheaval.<\/p>\n
However, the price index is still far below its high of 740.88
\non July 8.<\/p>\n
The buying spree before the close of the week caused prices of
\nsome shares to increase above the allowable level of 40 percent
\nin a single day's trading. This caused the stock market authority
\nto temporarily suspend seven issues: Lippo Cikarang, BAT
\nIndonesia, Bayu Buana, Clipan Finance Indonesia, Bakrie Land
\nDevelopment, Keramika Indonesia 53.85 percent and Multi Bintang
\nIndonesia 44 percent.<\/p>\n
The JSX management is expected to resume the trading of the
\nseven issues today.<\/p>\n
Stock dealers regretted the decision to suspend trading.<\/p>\n
Currency<\/p>\n
The encouraging trading last week was partly the result of
\nBank Indonesia's decision to cut the interest rate of its
\npromissory notes (SBIs) by 300 basis points to 27 percent and 25
\npercent.<\/p>\n
Analysts said the improvement in investors' confidence in the
\nequity market would also have a positive impact on currency
\ntrading.<\/p>\n
They said that the rupiah, which started recovering over the
\nweekend, would further gain despite the cut in interest rates.<\/p>\n
The rupiah strengthened to 2,970\/3,000 against the U.S. dollar
\nonshore late Friday after keeping above the 3,000 level
\nthroughout most of the week.<\/p>\n
But most analysts were still cautious about the currency
\nturmoil which has hit the region over the past couple of months.<\/p>\n
Indonesia along with Malaysia, and the Philippines has been
\nthe hardest hit since the Thai baht was devalued early July.<\/p>\n
\"We cannot predict when the rupiah and other currencies will
\nstabilize. It is the currency that will dictate the direction of
\nthe stock market,\" Tjandra Kartika, Vice President of Mashil Jaya
\nsecurities said.<\/p>\n
Mirza Adityaswara of Morgan Grenfell Asia shared Tjandra's
\nview saying that the recovery of the country's capital market
\nstill had a long way to go.<\/p>\n
\"It is difficult to expect the market to recover soon. It will
\ntake at least three to four months to recover.... maybe,\" he
\nsaid.<\/p>\n
Minister\/State Secretary Moerdiono had also indicated that the
\nmarket mechanisms would determine what the rupiah's new
\nequilibrium level would be.<\/p>\n
The JSX Composite index rose by 22.99 percent or 100.151
\npoints to 594.113 last week from 479.014 points at the end of the
\nprevious week.<\/p>\n
The average daily turnover rose 20 percent to 483.8 million
\nshares changing hands last week from a meager 401.80 million
\nshares in the previous week.<\/p>\n
The average daily value also rose 16.6 percent to Rp 546.6
\nbillion (US$197.78 million) last week in comparison to Rp 468.77
\nbillion in the previous week.<\/p>\n
Naotake Ikeda, sales and business director of the Asian
\nDevelopment Securities said that he did not expect the index to
\nhover to previous high of above 700.<\/p>\n
\"I don't think, it (the main price index) will get back to
\nthat level. At the most, it will reach between 610 and 620,\" he
\nsaid.<\/p>\n
\"I am still very cautious about this market. We expect there
\nwill be a slight correction next week with the index hovering
\naround 600 or just below that level,\" a dealer with a joint
\nbrokerage firm said.<\/p>\n
Of course heavyweight stocks made big gains with the
\ngovernment's new reform package.<\/p>\n
State-run Telkom rose Rp 550 to RP 3,575, Indosat by Rp 1,225
\nto Rp 7,775, BNI by Rp 175 to rp 1,150 and BDNI by Rp 75 to Rp
\n800, cigarette maker Gudang Garam shot up by Rp 1,250 to Rp
\n10,200 and its rival HM Sampoerna by Rp 1,375 to Rp 8,225. (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/share-prices-are-expected-to-remain-strong-this-week-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}