Bull run hits Jakarta stock market

JAKARTA (JP): Shares prices on the Jakarta Stock Exchange (JSX) rose 3.7 percent on Monday as foreign and local investors flocked into the market, encouraged by a smooth start to the country's election campaign.

The JSX Composite Index passed through the 600 point level to close at a record high of 613.641 since mid-1997. Gainers led losers 146 to 17 with 62 stocks unchanged.

Trading volume totaled 1.14 billion shares changing hands valued at Rp 770 billion (US$95 million).

Foreign investors still dominated the buying of blue chips, while local investors were more in the second-tier cheaper stocks, said a stockbroker from a local private bank-affiliated security house.

"Foreign investors reacted more quickly to the smooth start of the election campaign period," he said.

The campaign period involving 48 political parties started last Wednesday and will continue through June 4.

The broker said investors were also heartened by the fact that the lowering of the central bank benchmark interest rate did not drive down the rupiah significantly.

Bank Indonesia last week allowed the interest rate of its benchmark one-month SBI promissory notes to decline by more than two percentage points, to slightly over 27.88 percent from 29.99 percent.

"Our rupiah looked convincingly strong when the interest rates were cut further. This of course improves the sentiment both on the rupiah and the local stock market," he said.

Rupiah closed Monday trading at Rp 8,135 against the U.S. dollar.

Stockbrokers said worries over possible riots during the launch of the campaign of the ruling Golkar party Monday were found to be baseless, triggering investors to take buying positions.

Baradita Katopo, head of research at Usaha Bersama Sekuritas, attributed the rising stock price index to the positive market sentiment and improved economic fundamentals.

"Now, most people expect a smooth campaign toward the June 7 election," Baradita said.

He said that improving economic fundamentals like low inflation, improving gross domestic product, falling interest rates and a stabilizing rupiah had helped drive the market up over the past few weeks.

"Foreign investors and also local investors now have enough confidence in Indonesia's improved economic prospect and that drove the market index up today (Monday)," Baradita said.

He predicted that the index would stay over 600 points in the near future due to the moderating inflation rate in the last few months.

Inflation, he said, should be reflected in the share prices because the assets of those listed companies should rise when inflation flattens.

Shares of retail companies -- which had been mostly depressed because of investors' previous expectations that these companies would be riot victims -- were corrected.

Department store Ramayana rose Rp 675 to Rp 5,175 and grocery store Hero closed up Rp 175 to Rp 1,900.

Blue chips also continued their good momentum.

State-owned telephone company Telkom rose Rp 200 to Rp 4,150 and international call operator Indosat was up Rp 200 to Rp 16,000.

Cigarette maker HM Sampoerna surged Rp 675 to Rp 14,300, while rival Gudang Garam rose Rp 200 to Rp 17,550. (udi)