Stock prices may fall following mass riots<\/p>\n
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
\nare projected to further decline this week on foreseeable selling
\npressures, as most investors are nervous about staying in the
\nmarket due possible issues tied to the weekend riots in the city.<\/p>\n
The action of the police and soldiers on Saturday morning in
\nsupport of the government-backed executives of the Indonesian
\nDemocratic Party to take over the party's headquarters here from
\nthe supporters of ousted chief Megawati Soekarnoputri ended with
\nmass riots in various parts of the city for the rest of the day
\nand on Sunday.<\/p>\n
An executive of a securities company told The Jakarta Post
\nyesterday that the rioting will drive share prices down sharply
\ntoday and the market performance in the next few days will be
\nstrongly dependent on the ensuing events of the PDI incident.<\/p>\n
\"I think that because the Saturday riot got worldwide media
\ncoverage, particularly by the U.S. CNN, it would not be so
\ndifficult for foreigners to know the latest political situation
\nin Indonesia,\" said the executive, who wanted to remain
\nanonymous.<\/p>\n
\"And I believe investors will be too nervous to maintain large
\nportfolios here,\" he added.<\/p>\n
The executive said most foreign investors realized Megawati is
\nin a losing position following the election of Soerjadi as the
\nparty's new chairman by a government-backed congress in Medan,
\nNorth Sumatra, in late June. \"They also anticipate that any
\nactivists' move would not return the leadership to Megawati.<\/p>\n
\"But the action of police and soldiers yesterday was
\nsurprising,\" he added yesterday.<\/p>\n
JSX share prices have continuously declined in the past two
\nmonths, with stock analysts naming political issues as among the
\nreasons.<\/p>\n
Several dealers consider the number of demonstrations by
\nMegawati supporters since June a strong indication that the
\npolitical situation is very unstable.<\/p>\n
The JSX's composite index continued to decline from its
\nhighest level of 630 points on April 24 to 561 last Friday
\ndespite six new publicly offered shares being listed since the
\nend of June.<\/p>\n
The dealers said the JSX share prices' plunge actually
\ncoincided with the weakening performance on global equity markets
\non speculations on an increase in interest rates in both the
\nUnited States and Japan.<\/p>\n
\"But for Indonesia, the price drops are also attributable to
\nthe political situation,\" a dealer from a foreign based brokerage
\nsaid.<\/p>\n
There is also speculation on the market that certain parties
\nmay have expected the price decline and tried to take advantage
\nof the instability.<\/p>\n
None of the several stock analysts contacted by the Post last
\nweek foresaw a possibility of a technical rebound on big caps
\nwhich were already corrected, meaning that such speculation would
\nbe groundless.<\/p>\n
\"I think foreign investors will continue to sell their
\npositions on big caps next week,\" a dealer with a London-based
\nsecurities company told the Post over the weekend.<\/p>\n
\"There are some issues in the market and I'm just not sure
\nwhich is the major reason for the bearish mood of the last few
\ndays,\" a senior trader from a local brokerage said.<\/p>\n
PT Lippo Securities' managing director, Kelvin Lee, shared the
\nidea and said: \"What was happening last week was a market which
\nwas heavily driven by local retailers. But I am sure they will
\ncontinue to trade shares actively next week.\"<\/p>\n
Lee also predicted that the market would be highly volatile
\nand it would not be easy to take quick \"cut loss\" or \"profit
\ntaking\" actions.<\/p>\n
One deal also pointed out that unlike few years ago, foreign
\ninvestors who actively make big deals are not only Asian and
\nEuropean investors but also American investors.<\/p>\n
\"And it's worth noting that those investors have preference on
\ndifferent sectors, meaning that if they liquidate their
\nportfolios simultaneously, several sectors will be heavily hurt,\"
\nhe added.<\/p>\n
Selling pressures<\/p>\n
The JSX last week recorded a total trading volume of 797.5
\nmillion shares worth Rp 1.7 trillion, while the number of listed
\nshares rose to 57.5 billion with the additional share listing of
\nthree companies -- PT Ramayana, PT Surya Dumai and PT
\nFiskaragung.<\/p>\n
Foreign selling on big shares last week, coupled with local
\nprofit-taking and speculation on second liners, pushed share
\nprices down by 3.2 percent.<\/p>\n
Telkom, the largest stock on the JSX, declined by Rp 75 to
\nclose the week at Rp 3,325, while Indosat dropped by Rp 550 to Rp
\n7,525.<\/p>\n
Cigarette company HM Sampoerna closed the week Rp 1,300 lower
\nat Rp 23,900, while its rival Gudang Garam lost Rp 575 to close
\nat Rp 9,100.<\/p>\n
On the debut of retailer Ramayana on the JSX, the share prices
\nof another retail company Matahari, closed lower at Rp 3,825
\nagainst the previous week's close of Rp 4,375.<\/p>\n
Other declining stocks were Tambang Timah, which closed at Rp
\n4,050 (against the previous week's close of Rp 4,275), Semen
\nGresik at Rp 5,800 (from Rp 5,975), Asahimas at Rp 1,700 (Rp
\n2,050). Astra International at Rp 2,475 (Rp 2,575), Bank
\nInternasional Indonesia at Rp 5,700 (Rp 6,025), Barito Pacific
\nTimber at Rp 1,575 (Rp 1,750), Bimantara Citra at Rp 2,275 (Rp
\n2,525), Lippo Bank at Rp 2,625 (Rp 2,850) and Mulia Industrindo
\nat Rp 2,700 (Rp 2,950).<\/p>\n
Meanwhile, two of the three newly-listed stocks performed well
\namid the weakening market. Salt producer Fiskaragung gained 15
\npercent to close at Rp 1,525 (against its initial pubic offering
\nprice of Rp 1,325), while Ramayana stood at Rp 3,575 after
\nreaching its high of Rp 3,750 on Wednesday. Ramayana's initial
\npublic offering price was Rp 3,200.<\/p>\n
The other newcomer, plywood producer Surya Dumai, closed the
\nweek Rp 50 higher at Rp 1,050. (alo)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/stock-prices-may-fall-following-mass-riots-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}