Bearish mood predicted to continue on JSX

JAKARTA (JP): The downward trend is predicted to continue on the Jakarta Stock Exchange (JSX) this week on weakening support from both foreign and domestic investors.

"I think JSX share prices will continue to decline next week. It may take two to four weeks more to end the bearish mood," a senior trader at PT Sanyo Primarindo, Nadjib Usman, told The Jakarta Post.

Nadjib said the general sentiment has been so weak in the last three weeks, with most foreign investors sidelined, while domestic investors have been trying to speculate on certain counters.

"The situation got worse this week, following the riot on Thursday related to the crisis in the Democratic party," he added.

Supporters of the chairperson of the Indonesian Democratic Party (PDI), Megawati Soekarnoputri, marched in Central Jakarta on Thursday protesting against a government-sponsored congress in Medan, North Sumatra, which was designed to elect Soerjadi as new chairman. The street rally ended in violence.

Nadjib said that the PDI crisis further weakened the market, which was already down.

"I would say that foreign investors don't care whether Megawati or Soerjadi will lead the party. They only view that a stable political situation will secure their investment," an executive of a securities company, who asked to remain anonymous, told the Post.

"It is not Golkar (the ruling party) or PDI that develops the stock market. But the stock market performance depends on political stability which should be created by those political parties," he said.

"I would say that riots like the one on Thursday are normal in other countries. But the Thursday violence frightened many people, particularly foreign investors, just because it happened in Indonesia.

"Although PDI will eventually get a new leader, I cannot say whether it's good or bad, because investors are looking for a more stable political situation," he added.

Time to buy

Several analysts contacted by the Post shared the opinion that this week is the right time to buy, suggesting that most stocks including big caps like Indosat and Telkom are already low.

"It's not easy to predict the market but technically I would say that it's the right time to buy no matter whether it's next week or the next two weeks," Lippo Securities's managing director, Kelvin Lee, said.

JSX share prices, which dropped by 20.4 points in the previous week, fell again by 19 points last week to close at 572.85.

Among the big caps which saw price drops last week were Astra International, which closed the week at Rp 2,525 (US$1.07) (as compared to Rp 2,700 at the previous week's close), Barito Pacific Timber Rp 1,500 (Rp 1,750), Gudang Garam 9,150 (Rp 9,950), Indosat Rp 7,425 (Rp 7,550) Indocement Rp 7,575 (Rp 8,050), Semen Gresik Rp 6,350 (Rp 6,875), HM Sampoerna Rp 26,175 (Rp 26,800) and Tjiwi Kimia Rp 2,375 (Rp 2,475).

The Telkom share price closed at Rp 3,300 last week, as compared to Rp 3,550 at this month's opening.

Nadjib, however, predicted a lack of purchasing power because foreign investors may stay sidelined to wait for a more stable political situation.

Holidays

Moreover, according to Nadjib, domestic investors may also reduce activity because of the school holidays in addition to their typical strategy of "just following foreign investors' moves".

The JSX will see the first new listing this year of PT Lippo Karawaci and an introductory listing of PT Tri Polyta this week.

Tri Polyta is the country's largest producer of polypropylene resins. It was listed on the NASDAQ in the United States in 1994.

The JSX booked total transactions of 393 million shares worth Rp 989 billion last week, compared to the previous week's 391 million shares worth Rp 1.16 trillion.

Foreign buy transactions amounted to Rp 730 billion against sell transactions of Rp 714 billion.

Lee said that the JSX was very weak last week in line with a weakening performance at global equity markets.

The most active stocks in value last week were Telkom (with a total trading value of Rp 129 billion), followed by Bank Mashill (Rp 53 billion), Gudang Garam (Rp 44 billion), Indosat (Rp 43 billion), Sampoerna (Rp 40 billion), Indah Kiat (Rp 35 billion), CMNP (Rp 33 billion), Bank Internasional Indonesia (Rp 30 billion), Indocement (Rp 29 billion) and Semen Gresik (Rp 29 billion). (alo)