Analysts predict JSX trading to remain quiet

Analysts predict JSX trading to remain quiet

JAKARTA (JP): Several analysts are forecasting that trading
activities on the Jakarta Stock Exchange (JSX) will remain quiet
this week due to the wait and see attitude of investors.

"I think the situation would be unchanged next week," a senior
trader from PT Pentasena Arthasentosa, Sumirat, told The Jakarta
Post.

"Like this week, the market might lose support from both
foreign and local investors," he added.

The president of PT Inter Pacific Securities, L.G. Rompas,
noted that fundamentally, there is no reason for a weak
performance on the JSX but there might be another reason for
investors' wait and see attitude.

"Our macroeconomy and stock market structures are much better
now, so we can see that, unlike in the past years, the market
easily recovers following any big drops," Rompas told the Post
over the weekend.

Rompas, however, said that most foreign fund managers might
need more time to get a better understanding about Indonesia
before deciding on whether to enlarge or to cut their investment
here.

Sumirat also said that lack of fresh foreign funds will
further discourage foreigners from making big deals. It means
that they will continue to be sidelined because they really do
not have buying power, rather than because of fundamental
reasons.

"In such a situation, only big news, like those on much better
than expected first-half earnings results, may ignite investors
to bring in fresh funds."

Several big companies, like Indosat and Tambang Timah, have
published their results in the first half of this year, which
showed higher profits. Unfortunately, the higher profit figures
were just in line with fund managers' expectation.

"No wonder the prices of the two companies' shares did not
increase following the announcement of the results," a dealer
with a foreign brokerage said.

Sumirat said that lack of buying power is also attributable to
many rights issues which have raised the amount of fresh funds to
more than Rp 2.5 trillion this year.

"It's worth noting that many big companies like Gajah Tunggal,
Indah Kiat and Polysindo issued rights shares."

Commenting on the large amount of funds raised through a
number of rights issues, Rompas said, "It means that our market
is active despite the fact that new initial public offerings are
very limited this year, as compared to last year."

Rompas and Sumirat, however, didn't clearly mention the main
reason for foreigners' hesitation to bring in more fresh funds.

Rompas only said: "Of course, investors also take a close look
at noneconomic factors."

Profit taking

Profit taking on most blue chips pushed down stock prices on
the JSX by 2.3 percent last week.

The JSX Composite Index closed at 547.71 points last week,
down by 13 points, following a late rebound in the previous week.

Several dealers said that the decline might be affected by
price drops in the region, while others said that domestic
political issues were the main reason for such a decline.

Although the government has repeatedly mentioned that the July
27 mass riots had minimal impact on the economy, what was
happening in the market signaled that the market is still
uncertain about the country's political stability, a dealer said.

The fact that many foreign fund managers joined a capital
market conference here last week has also been cited by several
stock analysts, businessman and government official as proof that
foreign investors are still positive about investing here.

Data from the JSX show that despite profit taking actions,
foreign investors turned to be net buyers last week, as compared
to a net selling position in the previous week.

Sell transactions by foreigners amounted to Rp 680 billion
(US$288 million) against buy transaction of Rp 700 billion last
week, as compared to the previous week's figures of Rp 1.03
trillion for selling transactions and Rp 903 billion for buying
transactions.

Total transactions on the JSX were recorded at 587 million
shares valued at Rp 1.2 trillion against the previous week's 650
million shares worth Rp 1.5 trillion.

Corporate action

Several counters of the Gajah Tunggal Group -- BDNI, Gajah
Surya Multi Finance, Andayani Megah and Gajah Tunggal -- were
actively traded last week due to reports on plans of acquisition
and rights issuance.

The group's multifinance arm, Gajah Surya, topped the big
gainers, with its share prices jumping by 40 percent to Rp 1,400
at last week's close on news that it will acquire a 51.8 percent
stake in the group's commercial bank, BDNI.

BDNI recorded total transactions of 47 million shares worth Rp
90 billion while Gajah Surya made total transactions of 56
million shares valued at Rp 82 billion.

The group's tire cord maker Andayani booked total transactions
of 21 million shares worth Rp 28 billion and its tire maker Gajah
Tunggal, 29 million shares valued at Rp 35 billion.

Meanwhile, Great River International, which is currently
preparing the establishment of two joint ventures with Indomulti
Inti of the Salim Group, enjoyed a trading volume of 30 million
shares worth Rp 38 billion.

Great River's move also boosted the share price of its joint
venture partner, Indomulti, to close 18 percent higher last week
at Rp 1,900.

The top 10 stocks in values, other than BDNI, Gajah Surya,
Great River and Gajah Tunggal, were Telkom (with a trading value
of Rp 70 billion), HM Sampoerna (Rp 51 billion), Dharmala
Intiland (Rp 40 billion), Bimantara Citra (Rp 37 billion), Semen
Gresik (Rp 36 billion) and Gudang Garam (Rp 36 billion). (alo)