Shares are likely to drop again after slight rebound<\/p>\n
JAKARTA (JP): After a slight rebound late last week, share
\nprices on the Jakarta Stock Exchange (JSX) are likely to fall
\nagain this week despite the International Monetary Fund's
\ndecision to inject more funds into the country.<\/p>\n
Analysts said that funds from international financial
\ninstitutions such as the IMF, despite good in nature, would not
\ndo much to enliven investors sentiment in the local market due to
\nthe country's devastating economic and political situation.<\/p>\n
Vickers Ballas' head of research Tamara Noraya Soewarno said
\nFriday: "The country has so many problems this time around ...
\nsocial and political and economic problems which need to be
\nsolved immediately."<\/p>\n
"So news on the IMF's fund will not ignite any massive buying
\nspree in the local market," she said.<\/p>\n
Following the debt accord between the Indonesian government
\nand the Paris Club Members on Wednesday to rollover the country's
\nUS$4.2 billion sovereign debt, the IMF approved on Friday a $940
\nmillion payment from its $11 billion bailout funds to help
\nIndonesia overcome its financial catastrophe, manage external
\npayments and improve the rupiah.<\/p>\n
Analysts said they believed that unlike shares, the rupiah
\nwould perform better this week, partly due to positive sentiment
\non the IMF's latest loan disbursement.<\/p>\n
The rupiah, which closed firmer at 10,950 on Friday last week
\ncompared to its close at 11,200 the previous week, continued to
\nhover around the 11,000 level against the U.S. dollar over the
\npast two weeks.<\/p>\n
The analysts said that hope for a U.S. interest rate cut this
\nweek was also expected to boost the rupiah's stance against the
\ndollar.<\/p>\n
Mashill Jaya Securities' head of research Edhi Widjojo said,
\n"The cut in the interest rate will almost have no impact on the
\nlocal stock exchange."<\/p>\n
He said the interest rate cut would not bring much help to the
\nailing stock trading given the poor condition of the country's
\nfundamental economic indicators.<\/p>\n
"With no signs of economic recovery, most investors prefer to
\nput their funds in the money market," he said, pointing out the
\n60 percent interest rate of time deposits in the banking system.<\/p>\n
Noraya said that though some stocks had been cheap, foreign
\nfund managers were still reluctant to enter the hammered local
\nmarket as political uncertainty and poor economic conditions
\nhinder them to do so.<\/p>\n
She said foreign fund managers continue to discard the stocks
\nwith strong fundamentals and dollar earnings, like pulp and paper
\nproducer Indah Kiat, Tjiwi Kimia and fishing firm PT Daya Guna
\nSamudera.<\/p>\n
Stock brokers said that market sentiment would remain bearish
\nthis week as market fears for a possible massive riot ahead of
\nthe anniversary of a bloody communist coup attempt of 1965.<\/p>\n
Bali's Hendra said, "Hopefully there will be no riots but the
\nmarket feels that there will be some sort of demonstration this
\nweek."<\/p>\n
News reports said that the military has beefed up its presence
\nin Surabaya, East Java, amid ubiquitous speculation that a large
\nscale demonstration and even riots were being planned for Sept.
\n30.<\/p>\n
Sept. 30 is a historical day for Indonesians as it marks the
\nattempted communist coup leading to the ascension of former
\nPresident Soeharto into power in 1965.<\/p>\n
The Jakarta Stock Exchange Composite index rose 3.55 points to
\n275.22 last week from 271.67 the previous week.<\/p>\n
Total daily average turnover rose to 251.64 million shares
\nchanging hands last week compared to 220.94 million shares the
\nprevious week.<\/p>\n
But daily average transaction value fell to Rp 190.56 billion
\nlast week compared to Rp 272.29 billion the previous week. (aly)<\/p>",
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"sponsor": "Okusi Associates",
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