Stock market to recover from recent slump<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
The Jakarta stock market is expected to recover from its
\nrecent slump as investors will not abandon as yet a market where
\nmost of its stocks are undervalued in a country whose economic
\nfundamentals are not as bad as many might have said.<\/p>\n
An investment analyst at a foreign-based bank also said that
\nthe country might benefit from the WorldCom fiasco, which
\nreportedly had caused plenty of U.S.-based fund managers to shift
\ntheir investments to Asia.<\/p>\n
Although it was also WorldCom that has contributed to a sharp
\ndecline in the Jakarta Composite Index, he said, Indonesia should
\ntake advantage of the scandal as plenty of investment
\nheavyweights were now entering the Asian market.<\/p>\n
\"... Coupled with the fact that the current prices of some of
\nleading corporates are considered as very cheap, I think (the)
\nIndex will start to rebound in the near future,\" he told The
\nJakarta Post over the weekend.<\/p>\n
\"I haven't seen such funds entering the Jakarta market, but we
\nshould not rule out such prospects as our market has been long
\nregarded as speculative and having a high level of volatility,
\nmaking it attractive for punters.\"<\/p>\n
PT Danareksa Securities analyst Ferry Latuhihin also said the
\nindex would climb back soon, amid what he referred to as \"the
\nnot-so-bad\" macro and microeconomics conditions.<\/p>\n
After experiencing a strong performance in the past several
\nmonths, the index has been put under heavy pressure in recent
\nweeks due to external and internal factors.<\/p>\n
The index closed lower Friday at 492 points, more than a 50
\npoint drop from its level in mid-June.<\/p>\n
\"It was external factors such as the WorldCom scandal and also
\ninternal ones, at corporate level, that are to blame for the
\nindex's sharp fall, not the fundamentals,\" Ferry wrote in an
\narticle published in Bisnis Indonesia recently.<\/p>\n
\"But this sentiment would soon go away, and the index would
\nget back on its previous upward track,\" he added.<\/p>\n
Both analysts shared the same opinion that setbacks in various
\nmacroeconomics indicators, such as a drop in foreign direct
\ninvestment (FDI) and in exports, were mainly due to a slower pace
\nof the global economic recovery, therefore they cannot be held
\nresponsible for the index's fall.<\/p>\n
The WorldCom scandal erupted last month when the accounting
\nfirm giant admitted that it had improperly booked US$3.8 billion
\nof expenses.<\/p>\n
The scandal spread out bad signals worldwide amid uncertainty
\nover the pace of global economic recovery, especially in the U.S.
\nand Japan, sending bourses in many countries stumbling.<\/p>\n
The Jakarta stock market was no exception, starting to lose
\nsome of the 36 percent in gains it had recorded since the
\nbeginning of the year.<\/p>\n
This has been exacerbated by some questionable corporate
\nactions.<\/p>\n
State-owned telecommunication firm PT Telkom's decision to
\ncancel the planned issuance of $100 million worth of bonds and
\nset aside 50 percent of its profit for dividend payment created
\nworries among market players over the company's liquidity
\ncondition.<\/p>\n
And the recent blast near the Army's Special Force building
\nraised concerns of political and security disturbance ahead of
\nthe People's Consultative Assembly annual session in August.<\/p>",
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