Closer presidential race to weigh on JSX

JAKARTA (JP): Tightening competition around the country's presidential race will be a major influence on trading on the Jakarta Stock Exchange (JSX) this week, according to equity analysts.

They said over the weekend that a change in the political map of the presidential battle caused by a sudden turnaround by one of the major parties would directly weigh on market sentiment.

The presidential race became complicated after the National Awakening Party (PKB) announced last week that it supported the presidential nomination of the party's founder, Abdurrahman Wahid.

The move, as many said, would disadvantage the relative position of Indonesian Democratic Party of Struggle's (PDI Perjuangan) Megawati Soekarnoputri who was previously competing only against incumbent President B.J. Habibie.

One analyst said the high degree of chance that Megawati would win the presidential election was positively accepted by the market. "But now it is ruined by Habibie's bigger chance in the presidential race."

Ario W. Adhhikari, an analyst from PT ABN Amro Asset Management, said that generally investors were still waiting for signs that a good government with a good president would be installed in the country.

"The market wants a positive indication that the country is on the path toward the formation of a new government led by a democratic president," Ario said.

"Now Abdurrahman's nomination has somehow created a new political unpredictability that directly weighs on investors' mood," another analyst said, adding that the unpredictability greatly increased market fluctuation.

However, Ario said local investors -- compared to their foreign counterparts -- were relatively active in the market for short-term buying and selling, heavily relying on market sentiment.

Foreign investors, Ario said, were rarely seen trading in the currently fluctuant market, opting to wait on the sidelines.

"Foreign investors are closely monitoring the market and are always ready to reenter as soon as a predictable political situation can be seen," he said, assuring that foreign investors were not leaving Indonesia.

He said that a stable market would restart with the hunt of a number of good fundamental stocks by foreign investors, following the formation of a new government which is accepted by the people.

"Basically, foreign investors still need to invest in Indonesia to diversify their portfolio," he said.

Company stocks with good fundamentals are still cheap despite having booked some gains lately, he added.

He said that foreign investors in Indonesia now had a thin to zero exposure to the country, thus, they would have to buy back a lot of stocks from the JSX to readjust.

Ario added that in the meantime any technical analysis for trading in the currently fluctuant JSX should not count until normal days are back, hopefully after the Assembly's session.

The JSX Composite Index increased 3.92 percent to 588.23 points last week from 566.04 points in the previous week.

Average daily turnover last week significantly increased to 902.64 million shares, compared to 482 million shares the previous week.

The average daily transaction value jumped to Rp 677 billion from Rp 559 billion the previous week, due mainly to active trading during the last two days of the week.

Last week's top gainers were PT Lippo Enterprises, rising 129.17 percent, PT Panca Overseas Finance, which went up 71.43 percent, and PT Bank Niaga, which ended the week 50 percent higher.

The losers of the week were PT Super Mitory Utama with a 34.62 percent drop, PT Bank Global Internasional, which took a 22.22 percent tumble, and PT Panin Life, which fell by 18.18 percent in the week.

The top brokerage firms by transaction value were PT Danareksa Sekuritas with Rp 420.3 billion, PT Vickers Ballas Tamara with Rp 303.4 billion and PT Merrill Lynch Indonesia, which did Rp 231.8 billion in business.

Meanwhile, the rupiah closed at 7,805 against the U.S. dollar last week, compared to its 7,970 close the previous week. (udi)