Upward trend in price of shares to continue<\/p>\n
JAKARTA (JP): The upward trend in the price of shares on the
\nlocal stock market will likely continue this week following
\nreports on the improvement of the country's economic
\nfundamentals, securities analysts said.<\/p>\n
\"We are fundamentally stronger now, with a more stable
\ninflation and improved production activities,\" said an analyst at
\na local brokerage house.<\/p>\n
But, he said, concerns over the country's environment of high
\ninterest rates and the still fragile political conditions would
\ncontinue to affect the buying mood.<\/p>\n
\"The Jakarta Stock Exchange (JSX) Composite Index will still
\nbe able to maintain its upward movement but the gains will be
\nlimited as cautions remain,\" he said.<\/p>\n
The Central Bureau of Statistics (BPS) issued on Friday an
\nencouraging report on the country's economic indicators, with a
\nlower inflation rate showing a downward trend.<\/p>\n
Exports and imports also showed significant growth in the
\nperiod January to May, reflecting an improvement in the country's
\neconomy.<\/p>\n
The JSX Composite Index, which fell below the 450 level early
\nin June and stayed below 500 for quite some time, showed an
\nencouraging performance last month and gained about 16 percent
\nfrom a month earlier.<\/p>\n
The index rose another 2.4 percent last week to close at
\n515.11 points, compared to 503.14 the previous week.<\/p>\n
Another analyst from a foreign brokerage house agreed that the
\nComposite Index still saw an upside this week, saying \"The market
\ncontinues to recover, but slowly.\"<\/p>\n
Posing suspicions about the recent market development, equity
\nanalyst Dandossi Matram speculated there had been invisible hands
\nserving to support the Composite Index from falling.<\/p>\n
There is the question of how the Composite Index has managed
\nto rise by 16 percent within the past month, despite higher
\ninterest rates, the heating up of the political condition and
\nsluggish regional markets, said Dandossi.<\/p>\n
\"Don't ask me for a logical explanation for it, but the
\nComposite Index did rise last week and is expected to rise
\nfurther next week,\" he said over the weekend.<\/p>\n
The Composite Index rose by 16 percent from 444.44 points on
\nthe first trading day of June to 515.11 points on the last day of
\nthe same month.<\/p>\n
Meanwhile, the central bank last week allowed the benchmark
\ninterest rate on its one-month SBI promissory notes to increase
\nfrom 11.74 percent to 12.33 percent, the highest level since the
\nend of last year.<\/p>\n
Dandossi surmised the upward movement of the Composite Index
\nwas merely political, adding that there were some interest groups
\nwho would like to prop up share prices ahead of the August
\npreliminary meeting.<\/p>\n
\"It is sometimes forgotten that political battles exist on the
\nJSX floor, like during the Soeharto regime, the Habibie
\ntransitionary period and now with the current administration,\" he
\nsaid.<\/p>\n
In August, president Abdurrahman Wahid is scheduled to deliver
\nhis accountability speech before the Consultative Assembly's
\nmembers, in which he has to explain his economic performance as
\nwell as his controversial decision to abruptly expel two of his
\nCabinet members from strong opposition parties in March.<\/p>\n
Dandossi said there was at least a month of consistent buying
\nthrough a particular foreign broker, despite the fact that there
\nhad not been any positive news in the country.<\/p>\n
The buy recommendation will probably be visible during the
\nperiod ahead of August, but investors ought to be careful,
\naccording to Dandossi.<\/p>\n
\"It's like having a buffer for our stocks, holding them so
\nthey won't go down too much. But the danger of artificial
\nComposite Index levels is always there,\" Dandossi said.<\/p>\n
In contrast to the occurrences at the JSX, the rupiah lost
\nground last week, despite a rise in the central bank's interest
\nrates.<\/p>\n
Dealers said concerns over what might occur in August is
\ngreater than the effect of interest rate hikes. They also said
\nthe rupiah this week would be in the narrow range of 8,650 and
\n8,800.<\/p>\n
\"The weakening of the rupiah last week, despite the interest
\nrate hike, was a clear sign that concerns about political events
\nin August is there,\" said a dealer.<\/p>\n
The rupiah lost about one percent of its value last week to
\nclose at Rp 8,765 against the U.S. dollar, compared to Rp 8,685
\nthe previous week. (udi)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/upward-trend-in-price-of-shares-to-continue-1447893297",
"image": ""
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