Stocks, rupiah to benefit from Mandiri IPO plan<\/p>\n
Dadan Wijaksana
\nThe Jakarta Post
\nJakarta<\/p>\n
As overall sentiment remains positive, the Jakarta Composite
\nIndex is expected to resume its upward trend this week from a
\nslight decline posted last week, said a dealer.<\/p>\n
\"The decline (in last week's trading) had nothing to do with
\nmarket sentiment. It was more investors waiting for fresh news,
\nwhich could be seen from the daily trading average.<\/p>\n
\"With sentiment relatively unharmed, I think the index has a
\ngood chance of rising again, maybe to a level of about 515
\npoints,\" a stock dealer told The Jakarta Post over the weekend.<\/p>\n
The index ended last week at 506.78 points, down 0.9 percent
\nfrom 511.45 the week before, with trading value averaging
\nRp 359.3 billion (US$43.8 million), down from Rp 469.2 billion
\nrecorded two weeks ago.<\/p>\n
She added that the index would also take advantage of an
\nexpected bullish sentiment toward the rupiah, propelled by the
\ninitial public offering (IPO) of state-owned giant Bank Mandiri
\nthis week.<\/p>\n
Under the Mandiri IPO plan, the government will offer up to a
\n20 percent stake in the country's largest bank, hoping to rake in
\nabout $330 million in proceeds.<\/p>\n
With about two-thirds of the cash likely to come from foreign
\ninvestors -- as what the government has optimistically said,
\ndemand for the rupiah will rise, boosting sentiment on the local
\ncurrency, in what will also bolster sentiment on the capital
\nmarket as well, notably in banking shares.<\/p>\n
The only obstacle that could derail the index's performance,
\nthe dealer said, was the case surrounding publicly listed state
\ntelecommunications firm PT Telkom.<\/p>\n
\"If we do not get a clear message from Telkom that there will
\nnot be a problem in the future over its financial report
\nauditing, then there is a strong chance that it will hamper the
\nindex,\" she added.<\/p>\n
Telkom appointed PricewaterhouseCoopers (PwC) to audit its
\n2002 financial report -- to avoid the delisting of its shares in
\nthe U.S. stock market -- but since the audit process might take
\nmore than two months, concerns abound that Telkom will not be
\nable to meet the July 15 deadline set by the U.S. Securities &
\nExchange Commission (SEC).<\/p>\n
Meanwhile in the currency market, a healthy demand for the
\nrupiah, expected from the Mandiri IPO plan, will push the local
\ncurrency higher against the U.S. dollar, a currency dealer said.<\/p>\n
\"If the government is right that two-thirds of the buyers will
\nbe coming from overseas, then we're going to see strong demand
\nfor the rupiah, because investors need to convert their funds to
\nthe local currency,\" he said.<\/p>\n
As such, this will boost sentiment for the rupiah, he added.
\n\"But, it will still be within a narrow range, with regard to the
\nrecent strong showing of the dollar against the world's major
\ncurrencies.\"<\/p>\n
The rupiah finished the week lower at Rp 8,290 to the dollar,
\ncompared to Rp 8,240 the week before.<\/p>\n
The country has been witnessing a surge in capital inflows for
\nthe past several months as investors are enticed by sales of
\nlocal assets -- including sales of IBRA's assets, divestment and
\nprivatization programs -- and high-yielding bonds.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/stocks-rupiah-to-benefit-from-mandiri-ipo-plan-1447893297",
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