Telkom in limbo, stock index at one-week low<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
Uncertainty over what sanctions the U.S. Securities and
\nExchange Commission (SEC) might impose on state
\ntelecommunications company PT Telekomunikasi Indonesia (Telkom)
\ntook the Jakarta Composite Index on Wednesday to almost its
\nlowest level for a week.<\/p>\n
Telkom woes managed to cast negative sentiment on the index,
\nas Telkom is the largest single item on the market, with a total
\ncapitalization of about Rp 50 trillion (US$6 billion).<\/p>\n
With such huge capitalization, a shift of one point in Telkom
\nshares can move the index by about 17 percent.<\/p>\n
The index plunged on Wednesday for the second day by 1.8
\npercent, or 9.569 points, to 524.26 following news that the SEC
\nhad not yet announced sanctions on Telkom after it missed a
\ndeadline on Tuesday to file its reaudited 2002 financial report.
\nDealers said that the weak market sentiment was also caused by
\nretreating shares in other markets in the region.<\/p>\n
"Telkom woes give investors reason to take profit," said a
\ndealer.<\/p>\n
However, there was no panic selling of shares belonging to
\ntroubled Telkom as they closed slightly lower, by 1.1 percent or
\nRp 50, to Rp 4,650 on profit-taking.<\/p>\n
A local stockbroker said that the absence of panic selling of
\nTelkom shares was because only 10 percent of its traded shares
\nbelonged to speculators, while the remaining 90 percent were held
\nby long-term investors.<\/p>\n
"Telkom shares would not fall below Rp 4,400, even if the SEC
\ndecided to delist Telkom from the New York Stock Exchange
\n(NYSE)," the broker said.<\/p>\n
The broker explained that investors took into account Telkom's
\noverall performance rather than its accounting problems, which
\nwere caused by an administrative defect.<\/p>\n
Another broker said that Telkom shares managed to stay above
\nwater as a lot of fund managers had continued to buy Telkom
\nbecause they did not want their investment in the shares crushed.<\/p>\n
Meanwhile, Telkom head of investor relations Rochiman Soekarno
\ntold The Jakarta Post that the company had not yet received an
\nannouncement from the SEC over what sanctions it might impose on
\nthe country's largest telecommunications company.<\/p>\n
The SEC urged Telkom to reaudit its report because the initial
\nversion had been audited by a company not affiliated with an
\nauditing company listed with the watchdog. The SEC gave Telkom
\nuntil July 15 to refile the 2002 financial report or face
\nsanctions that may include a delisting of its American depositary
\nreceipts. The SEC would not extend the deadline.<\/p>\n
Telkom initially had difficulty in fulfilling the SEC demand,
\nas many major international accounting firms operating here could
\nnot audit Telkom's accounts due to conflicts of interest.<\/p>\n
The company last week finally appointed
\nPricewaterhouseCoopers, but the auditing process could take up to
\nthree months to complete.<\/p>",
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