Bearish stock market seen continuing
Bearish stock market seen continuing
JAKARTA (JP): Share prices of the country's stock market will
remain bearish next year as worries over the country's social and
political prospects will continue to discourage investors,
according to analysts.
Stock market analyst Hasan Zein Mahmud said on Thursday that
uncertainty over the country's political format and possible
worsening of the social and security situations would continue to
cast a shadow across the capital market's activities.
He said that the key factor would be determined by the
political atmosphere before and after the general election, which
is scheduled for June of next year.
"If the general election runs smoothly and all respect its
results, the capital market bull will come back," Hasan, the
former president of the Jakarta Stock Exchange (JSX), said in a
seminar held by the Capital Market Journalists Club (CMJC).
But he warned that if the election did not run as expected and
many party members went on the streets to protest the election
results, the country's capital market would plunge to its worst
levels yet.
The Indonesian government is scheduled to hold a general
election on June 7 next year, followed by the general session of
the People's Consultative Assembly (MPR) on Nov. 30 to elect a
new president and vice president.
Analysts said they were worried the general election would not
solve the problem and that the antigovernment protests, which
have taken place almost every day since May, would instead
escalate.
Hasan said that another contributory factor to the bearish
stock market outlook next year was the worsening of the financial
performance of companies listed in the stock exchange.
He said that around 90 percent of the total 289 listed firms
in the local market suffered massive losses as the impact of the
country's worst ever crisis was fully felt.
The crisis, triggered by the plunge of the rupiah, could
worsen if the government's economic recovering measures failed to
solve the existing problems, he said.
"If it happens, no one will come to the country to do business
and as a consequence Indonesia could further plunge to zero,"
other analyst said.
The rupiah, which is hovering around 7,500, has lost almost 60
percent of its value against the U.S. dollar since the crisis
first hit the country in August during which the rupiah was about
2,500 against the American greenback.
Unlike Hasan, JSX president Cyril D Noerhadi said that despite
such a gloomy outlook, some investors would still be tempted to
enter the local market to benefit from cheap stocks.
He said that though political turmoil had swept the country in
1998, daily transactions value in the local bourse had declined
slightly to Rp 417 billion in the period compared to Rp 489
billion in 1997.
Daily trading volume, however, increased significantly to
around 378 million shares per day in 1998 compared to 311 million
shares the previous year, he said.
"This shows that the economic crisis has not adversely
affected our local market," he said Thursday.
JSX's Composite Index rose 1.2 percent on Thursday to end the
day at 403.66 with 261.13 million shares worth Rp 201.89 billion
changing hands.
Stock brokers attributed the slight increase to selective
program buying on certain blue-chip stocks to benefit from the
easing of interest rates in the banking system.
Taking the lead in the share prices, the rupiah remained
steady closing unbudged at 7,500 in light trading against the
U.S. dollar on Thursday. (aly)