Domestic market down on political concerns

Domestic market down on political concerns

JAKARTA (JP): The domestic financial market slipped further
yesterday due to political maneuvering, with the rupiah holding
at 15,250 against the U.S. dollar and stock prices inching lower
by 1.4 percent, dealers and analysts said.

They added that regional bearishness, sparked by the weakening
of the Japanese yen to 141 against the U.S. dollar, had also
contributed to the local market's downturn.

Most investors squared their positions before the weekend and
took profits ahead of Golkar's election of its new chairman.

"The market is still listless, except for some dollar buying
by state banks," a dealer with a local private bank said, noting
that state banks continued to purchase dollars to finance imports
by state agencies.

"All eyes and ears are now directed toward Hotel Indonesia
where Golkar's congress is being held. Most operators are just
taking a wait-and-see stance until the new chairman is elected."

A local member of the House of Representatives said after
meeting President B.J. Habibie yesterday that the IMF was waiting
to see whether Golkar's election would threaten the current
period of relative stability before the Fund disbursed its next
US$1 billion tranche of the $43 billion bailout package it had
arranged for Indonesia.

The dealer noted that the market was somewhat relieved to see
the latest developments in Golkar, in which Minister/State
Secretary Akbar Tandjung gained more support than his rival Edi
Sudradjat, former defense and security affairs minister.

Some analysts said Akbar was backed by Habibie, while Edi was
picked by supporters of former long-time president Soeharto.

Dealers said the rupiah hit a day low of 15,450 in the morning
over reports that Edi had procured more support. But when it
seemed that Akbar would be the winner in the afternoon, the
rupiah regained some of its lost ground and closed the day at
15,200/350.

The rupiah closed Thursday at 15,200.

Share prices on the Jakarta Stock Exchange (JSX) also
continued to decline, with the JSX Composite Index closing down
6.740 points at 463.581.

Trading turnover totaled 151.99 million shares valued at Rp
221.67 billion ($14.6 million).

Bahana Securities associate director and head of equity sales
Andre Cita said most investors cashed in profits ahead of the
weekend.

"A lot of companies have actually attracted foreign investors.
But right now, most investors are trying to keep their profits,"
Cita said.

He said the companies which had attracted massive buying
included state-owned cement maker PT Semen Gresik, gold and
nickel miner PT Aneka Tambang and other companies with dollar
earnings.

"Besides, everyone is a kind of distracted by the IMF, waiting
for the results of Ginandjar's trip to Washington, and at the
same time looking at Golkar's political developments," Cita said.

"If you combine those factors with the uncertainty of the
Japanese yen, you will see that they make the market pretty
lackluster."

The head of research at Vickers Ballas Tamara, Noraya
Soewarno, agreed, saying the correction was just normal after the
market experienced a rally.

The correction, however, was not so severe, thanks to rumors
that the government and a foreign investor would soon announce a
deal on Aneka Tambang, prompting investors to purchase the
company's stocks.

"I think Aneka Tambang is the star of the week, just like
Semen Gresik was last week," Noraya said.

Aneka Tambang continued to dominate trade yesterday, closing
up Rp 50 to Rp 2,050 with 15.5 million shares changing hands.

Semen Gresik, however, lost Rp 650 to close at Rp 11,300 as
most investors took profits. Semen Gresik soared 35 percent when
it resumed trading Tuesday, after the government announced that
it selected Mexico's Cemex SA as its preferred bidder.

Cemex offered $1.38 per share for a 35 percent government
stake and a 16 percent public stake at the Indonesian cement
producer.

Heavyweight state-owned domestic telephone monopoly PT Telkom
closed unchanged at Rp 4,350 with 8.6 million shares traded as
did international telephone operator PT Indosat which ended the
session at Rp 17,800 from 99,000 shares changing hands.

Cigarette giant PT Gudang Garam dipped Rp 650 to Rp 8,450,
while competitor PT HM Sampoerna gained Rp 25 to Rp 2,275. (rid)