Bargain hunting lifts stocks higher
Rendi A. Witular, The Jakarta Post, Jakarta
A day after a lethal terrorist attack rocked one of the country's famous business hotels, JW Marriott, the Jakarta Composite Index bounced back higher on Wednesday as investors, mostly foreign-based, hunted down undervalued blue chip shares.
The index ended up by 1.2 percent or 5.907 points to 494.43. On Tuesday's trading, the index plunged by 3.1 percent to a more- than-two-month low of 488.52.
"Foreign investors remain as dominant buyers, indicating that they are still placing huge confidence in the Indonesian economy. For sure, they have learned from previous bombing incidents," said an analyst with a state-owned brokerage firm.
The analyst said that even after the first semester rally, Indonesian stocks were still relatively cheap, driving many investors to track down shares with good prospects.
"Investors have taken advantage of the sell-off after the bombing disaster; this is the right time to buy," he said, adding that the index would likely hover at around 480 to 510.
However, he said, overall sentiment remained cautious as investors were still keeping an eye on the development of the security situation and on what the government would do to find out who was behind the bombing.
On Wednesday's trading, 72 shares booked gains, 22 losses and 54 were unchanged. Trading volume was 1.03 billion shares valued at Rp 761 billion, as compared with 2 billion shares valued at Rp 1.1 trillion on Tuesday.
Automotive company PT Astra International led the gainers, soaring by 5 percent or Rp 175 to Rp 3,650, with JP Morgan Securities as its net buyer of 12.3 million shares, with a net value of Rp 44.6 billion (US$5.1 million).
The second top gainer was state telecommunications company PT Telekomunikasi Indonesia (Telkom), whose shares jumped by 3 percent or Rp 125 to Rp 4,250 apiece. Merrill Lynch Indonesia was seen as the net buyer of Telkom shares, pocketing 5.7 million shares worth Rp 24.5 billion.
Another gainer was cigarette producer PT HM Sampoerna, whose shares soared by Rp 75 to Rp 4,000. DBS Vickers Securities was a net buyer of 1.6 million shares, valued at Rp 6.4 billion.
Newcomer Bank Mandiri, unchanged at Rp 750, was the most actively traded stock, with about 134 million shares traded.
Tuesday's Marriott bombing, which caused the index to plunge by 3.1 percent, was the deadliest incident since the Bali bombings in October last year, which also caused the index to fall to its lowest level since 1998.
However, panic selling by traders was short-lived, thanks to foreign-based brokerage firms whose late afternoon buying helped the index bounce back.