Aceh problems likely to impact on stock market

JAKARTA (JP): Initially underestimated political problems in the province of Aceh are likely weigh on share trading on the Jakarta Stock Exchange, securities analysts said over the weekend.

The analysts said worries that the referendum proposed by Acehnese could trigger a separatism movement in other provinces would certainly affect the market.

Mardesiana, from BZW Niaga Securities, said the Aceh issue, initially underestimated by the market, could develop into a controlling factor for this week's market sentiment.

Except for the Aceh factor, all issues such as economic fundamentals and foreign growing confidence on Indonesia's economy would remain positive, she said.

"But the market will just be stagnant as most investors keep a close watch on development in Aceh," she said over the weekend.

More than one million people took part in a mass rally in Banda Aceh early last week, sending a message to Jakarta of their demand for a referendum on self-determination for the province.

The JSX Composite index had not seemed to be affected by such incidents until late last week when the fall of the rupiah due to the Aceh issue noticeably sent the Composite index down.

The rupiah fell through the important psychological level of 7,000 last Thursday as problems in Aceh kept the market nervous. The rupiah ended the week at 7,020

More started to worry that Aceh's problem would hinder the government's efforts to cure the economy from the crisis, analysts said.

Chairman of the People's Consultative Assembly (MPR) Amien Rais, admitted last week that Aceh is a "major stakeholder" of Indonesia. If Aceh pulled out from such a position, Indonesia would certainly shake, Amien said on Friday, the first day of his visit to Aceh.

Amien has urged the Acehnese to take the referendum action as a last resort.

Another analyst said if a referendum demand is finally entertained by the government, it could plant a powerful seed toward the break up of the Republic of Indonesia.

"This goes without saying that this is bad for the market," he said.

He said it was very important that the government found a middle way that could be well accepted by Acehnese to resolve Aceh's crisis.

A Cabinet delegation, under President Abdurrahman Wahid's order, went to Aceh last Saturday.

They are expected to talk with local Acehnese leaders and decide strategies to be referred to by President Abdurrahman and Vice President Megawati Soekarnoputri in their visit to Aceh later this month.

Trimegah Securindolestari's Vonny Juwono, said the market would consolidate this week because the market had booked adequate gains from the past two weeks.

"The market this week will be unexciting, if not bearish," she said.

According to Vonny, the market did not end in a very good light last week.

Local retail investors ended the market last week with flows of profit taking on their blue chip shares holdings with many foreign investors staying on the sidelines.

Some high cap shares in cigarette, pulp and paper, plantation and food sectors lost noticeable ground from the profit taking.

Early this week will be marked by continued profit taking from last week, Vonny added.

Another analyst said there was, however, a good balancing story behind this week bleak outlook.

"Some good-quality second-liner shares might half-way balance the market's technical down-ride as local retail investors might speculate on the expectations that these second-liner companies will book higher earnings during the first nine months of the year," he said.

Some investors were already seen buying those shares. One of the companies they speculated on was carmaker PT Astra international, he added.

The JSX Composite Index increased 1.5 percent to 635.23 points last week from 626.04 points in the previous week.

The average daily turnover last week increased to 800 million shares, compared to 681.6 million shares the previous week.

The average daily transaction value increased to Rp 795.6 billion last week from Rp 672 billion the week before.

Last week's top gainers were PT Samudera Indonesia, rising 217.65 percent, PT BBL Dharmala Finance, which went up 64.29 percent, and PT Sinar Mas Multiartha, which went up 63.41 percent by end of the week.

The losers of the week were PT Bank Niaga, PT Bumi Modern and PT Super Mitory Utama, which all fell by 25 percent in the week.

The top brokerage firms by transaction value were PT Danareksa Sekuritas with Rp 368.4 billion, PT Trimegah Securindolestari with Rp 307 billion and PT Vickers Ballas Tamara, which did Rp 287.4 billion in business.

The rupiah closed up by 2.5 percent at 7,020 to the U.S. dollar last week over growing Aceh concerns, as compared to its 6,850 close the previous week. (udi)