Calm stock trading expected during MPR General Session

Calm stock trading expected during MPR General Session

JAKARTA (JP): Trading activities in the local stock market are
expected to remain calm this week as investors watch the General
Session of the People's Consultative Assembly (MPR), stock
brokers and analysts said.

Brokers said that short term investors, who made large
transactions last week, would probably take a wait and see
attitude toward the General Session.

"Though the market already knows the results of the meeting,
most foreign investors do not want to take risks in their
portfolio investment," Octavianus Tedjojuwono, a senior broker
with Bahana Securities said.

Members of the MPR have gathered in Jakarta to elect a
president and vice president for the next five year term. The
incumbent President Soeharto is expected to be reelected.

Stock analysts said that local and foreign investors expect
the government to properly address the country's economic and
political problems after the General Session ends on March 11.

Indonesia has been rocked by a sharp depreciation of the
rupiah against the American dollar, lack of confidence in the
government and tight liquidity in the market.

"The country has yet to address these problems properly", the
head of research at Pentasena Securities, Mohammad Syahrial,
said.

"the market wants a fixed rupiah rate either through a
currency board system or another mechanism to allow companies to
make their business plan," he said.

Tjandra Kartika, head of research at Mashill Jaya Securities
said that rupiah trading against the American dollar would
dictate stock prices on the local market this week as it would
affect the price of the overseas listed stock like PT Telkom,
Indosat and Tambang Timah.

"If the rupiah gains footing against the dollar, the value of
foreign listed stock like PT Telkom, Tambang Timah and Indosat
will decline," he said pointing to arbitrage trading on these
stocks which would benefit from the domestic and foreign price
differentials.

Stocks in these three companies have accounted for about 40
percent of market capitalization on the local bourse.

The rupiah closed at 8,950 to the American dollar last week,
in comparison to the previous week's close of 9,050.

Analysts and brokers said that mounting protests at the
escalating price of basic commodities would not have an adverse
impact on market sentiment.

"Foreign investors shrugged off such protests as their short
term funds were not affected," Laksono Widodo, a senior analyst
with ING Baring Securities said.

A brokers with a joint venture securities house said that
foreign investors would likely wait for further positive news in
the market to drive trading activities.

"The market has lost direction as there is no clear decision
yet on pegging the rupiah to a fixed exchange rate in a currency
board system," the broker said.

The JSX Composite Index ended 12.85 points lower at 482.37
last week, down from 496.25 points the previous week.

Average daily turnover rose 20 percent, with 623.77 million
shares changing hands last week, up from 517.41 million the
previous week.

Daily transaction value fell 5 percent to Rp 637.69 billion
(US$72.46 million) last week, down from Rp 669.25 billion the
previous week.

Shares in state-owned telecommunications monopoly Telkom
slipped by Rp 500 to Rp 3,500 while shares in satellite operator
Indosat fell Rp 1,200 to Rp 12,725. Shares in cigarette maker
Sampoerna fell Rp 25 to Rp 5,100. Shares in its competitor Gudang
Garam fell by Rp 150 to Rp 11,050.

Bank Internasional Indonesia shares rose by Rp 25 to Rp 600,
but shares in Bank Negara Indonesia and Bank Dagang Nasional
Indonesia remained steady at Rp 525 and Rp 275 respectively.
(aly)