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)