Bearish run continues on local stock market

Bearish run continues on local stock market

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
fell for the fifth consecutive trading day yesterday, dragged
down by heavy selling on most blue chip stocks, securities
brokers said.

They said that the poor corporate results of most publicly
listed companies had killed the buying appetite and most
investors were instead unloading blue chips stocks such as Gudang
Garam, HM Sampoerna, Astra International and Indosat.

The JSX composite index closed 1.1 percent, or 5.11 points,
down to 460.13 yesterday on a total turnover of 347.31 million
shares changing hands worth Rp 461.84 billion (US$57.01 million).

"There is no more positive news in the market now. Investors
continue to unload the blue chip stocks they hold," a broker with
BZW Niaga Securities said.

Gudang Garam's stock price shed Rp 50 to end at Rp 1,575, HM
Sampoerna fell Rp 375 to Rp 5,225, Astra International closed
down Rp 50 to Rp 1,575 and Indosat ended Rp 250 lower at Rp
11.700.

Securities brokers said that the lethargic trading in the
local bourse was also caused by market fears that more students
demonstrations would lead to street clashes with security
officers in the coming days.

University students in Medan, Jakarta and several other major
cities across the country continued their daily demonstrations
yesterday, demanding the government lower prices and make drastic
economic and political changes.

"It is too risky for foreign fund managers to put their funds
in the local market given such high political instability in the
country," an analyst with a local securities firm said.

The analyst said that foreign fund managers were even
predicting increased street violence in the coming weeks
following the government's plan to raise fuel and electricity
tariffs soon by partially lifting subsidies.

"The hike in fuel and electricity prices will propel students
to move into the streets," the analyst said.

"We anticipate much more bad news coming into the market in
the weeks ahead," he said.

Securities analysts and brokers said that worries about the
outcome of the International Monetary Fund's executive board
meeting on Monday to discuss the release of the next US$3-billion
tranche of the $43-billion economic reform package also cast a
shadow over the Jakarta bourse.

Brokers said that despite the government's reassurances over
its commitment to reform, the market was still skeptical as to
whether the IMF would release the second tranche.

"We are not sure if the second tranche will be disbursed early
next week,' the analyst said.

Most analysts said that the release of the $3 billion would
certainly restore investor confidence in the country's capital
market and prompt foreign fund managers to reenter the market.

The rupiah followed stock prices, with spot rupiah closing at
8,100 against the U.S. dollar yesterday.

Dealers said that the rupiah, however, weakened to as low as
8,250 in the morning on market response to the heated political
atmosphere across the country.

"Student demonstrations will prompt offshore funds to stay
away from the market," a chief dealer with a local private bank
said. (aly)