Stocks up, rupiah strengthens<\/p>\n
JAKARTA (JP): Bullish trading returned to the Jakarta Stock
\nExchange yesterday, with the Composite Price Index surging 14
\npercent in active trade.<\/p>\n
In the foreign exchange market, the rupiah also maintained its
\nstrengthening performance to close at 10,300 against the U.S.
\ndollar after almost reaching 11,000 in midday trading.<\/p>\n
Stockbrokers attributed the active trading to the return of
\nforeign investors and a rally in other regional markets.<\/p>\n
The government's macroeconomic and banking reform programs
\nbrought a fresh wind to the country's ailing stock market, the
\nanalysts said.<\/p>\n
\"Some foreign investors have come to test the market and local
\ninvestors have followed suit,\" one broker said, describing
\nyesterday's bullish trading.<\/p>\n
\"I think overseas players have realized that reforms announced
\nby the government early last week will bring the Indonesian
\neconomy back on track,\" a broker with a local securities house
\nsaid.<\/p>\n
\"Some foreign investors have considered the local market to be
\nvery cheap and have started to enter it again,\" he said.<\/p>\n
Investors believed that the new economic measures, including a
\ntemporary halt in the payment of mounting corporate foreign debt,
\nwould allow publicly listed companies room to breath.<\/p>\n
\"This is absolutely positive to their performance,\" he added.<\/p>\n
Indonesia has external debts totaling US$140 billion as of the
\nend of 1997 with the private sector's share at $66 billion.<\/p>\n
The JSX's Composite Price Index rose 68.16 points or 14
\npercent to close at 554.10 yesterday with 813 million shares
\nchanging hands on the regular market valued at Rp 835.39 billion
\n($85.24 million).<\/p>\n
The brokers said most big foreign brokerage houses, which had
\nstayed away from the local market due to rupiah volatility over
\npast few months, bought selected blue chip and second line stocks
\non a massive scale.<\/p>\n
\"Most foreign brokerage houses aggressively bought stocks of
\nblue chip companies with strong fundamentals and dollar-based
\nearnings,\" one broker said.<\/p>\n
The head of sales at BZW Niaga Securities, Adnan Tan, told The
\nJakarta Post that U.S. and European investors were looking to
\nbenefit from the low price of local stocks, helping increase
\nstock prices as trading picked up.<\/p>\n
\"A lot of hot funds from the United States and Europe poured
\ninto the region, including Indonesia, for cheap stocks. That is
\nthe main reason for the price increase,\" he said.<\/p>\n
He warned, however, that these foreign fund managers would not
\nstay long in the region as there had not yet been a significant
\nchange in the region's economic fundamentals.<\/p>\n
\"Market confidence has improved but it has not recovered yet.
\nFundamentally, there hasn't been a change yet in the region's
\neconomy,\" he said.<\/p>\n
The head of research at Pentasena Securities, Mohammad
\nSyahrial, said the increase in stock prices did not necessarily
\nreflect the recovery of investor confidence in the local market.<\/p>\n
\"The bullish market like today (yesterday) will last for one
\nweek or two. After that, it will go down again because most
\npeople are remaining cautious with the local market,\" he said.<\/p>\n
As stock prices increased, the rupiah remained stable against
\nthe American dollar yesterday with modest trading, currency
\ndealers said.<\/p>\n
The rupiah closed at 10,300 against the U.S. dollar yesterday
\nafter falling to 10,400\/10,700 during midday trading from a
\n9,700\/10,400 opening in the morning trading session.<\/p>\n
Currency dealers attributed the steady rupiah to the central
\nbank's repeated intervention in the market to prevent the
\ncurrency from falling further.<\/p>\n
\"The central bank was seen in the market selling a limited
\namount of dollars for rupiah,\" a dealer with a local private bank
\nsaid.<\/p>\n
Dealers said the central bank stepped in to the Singapore
\nmarket when the rupiah was at the 10,600 level and in Jakarta
\nwhen it hit the 10,500 level.<\/p>\n
Another chief dealer with a state bank said overseas players,
\nespecially from Singapore and Hong Kong, were not very active in
\nthe market yesterday, causing the rupiah to remain steady against
\nthe American dollar.<\/p>\n
\"The central bank's intervention was the main reason for the
\nsteady rupiah yesterday,\" a chief dealer with a local private
\nbank said. (aly)<\/p>\n
Related stories -- Page 8, 9<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/stocks-up-rupiah-strengthens-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }