Drops in U.S. stock markets may weaken Jakarta bourse
Drops in U.S. stock markets may weaken Jakarta bourse
JAKARTA (JP): Weak sentiment in the global market, driven by a
recent series of drops in the U.S. stock markets, will further
weaken the Jakarta Composite Index this week after it fell 2.5
percent last week, equity analysts have said.
The analysts said pale global sentiment and the absence of
foreign investors in the local market would send the Composite
Index down again.
"Next week the market will be very cautious amid the weak
global sentiment," said equity analyst Martin P.H. Panggabean on
the weekend.
"The slump in the Dow Jones and Nasdaq markets has upset major
stock markets around the world, including the Jakarta Stock
Exchange (JSX)," he added.
Other analysts also acknowledged the impact of a weak global
sentiment but said the local stock exchange -- which was already
at a low point -- would not react as badly as other regional
stock exchanges.
An analyst with a local securities house added that the global
stock exchange slump was initially caused by the recent steep
dive of high-tech stocks in the U.S.
"JSX does not have that many high-tech stocks. Thus, it should
not be too badly affected hopefully," he said.
But street demonstrations will also weigh negatively on JSX
trading this week, he added.
"The case involving former president Soeharto will certainly
remain a main issue for the street demonstrations next week," he
said over the weekend.
The students' demonstration last week went to the Attorney
General's Office to call for a more firm and prompt move in the
investigation of the former strongman.
The government recently named Soeharto a suspect in a
reinstated investigation of alleged corruption during his terms
in office.
However, the slow progress of the inquiry has drawn strong
protest from the public who demand prompt action.
Stock analysts and currency dealers did not see the
government's success in rescheduling US$5.8 billion in sovereign
debt at the recent meeting of the Paris Club of creditor nations
improve sentiment on the JSX or on the money market.
"We did not see any strengthening of the rupiah against the
U.S. dollar due to the Paris Club accord," Pardy Kendy, the
managing director of listed Bank Buana Indonesia, said last week.
This was because the market anticipated a positive outcome
from the Paris Club.
"It did not have any significant difference whether it (the
rescheduled debt) was $2.1 billion or $5.8 billion," he said.
Indonesia initially expected to reschedule $2.1 billion in
debts due this year, but the Paris Club agreed on Thursday to
reschedule a total debt of $5.8 billion maturing this year to the
first quarter of 2002.
Another reason why the market did not react positively to the
Paris Club news was because the rescheduling agreement was
strictly conditional upon the further support of the
International Monetary Fund (IMF), Pardy said.
"The Paris Club rescheduling agreement requires an endorsement
from the IMF," he said.
Meanwhile, he said, the IMF's endorsement was dependent on the
Indonesian government's ability to complete on schedule the
reform package as agreed upon by the IMF.
The Indonesian government has set a new deadline of April 21
to complete its economic reforms after failing to meet the
initial deadline at the end of March, which led to a delay in the
disbursement of $400 million in the IMF's aid package to
Indonesia.
"So market attention has now turned to the government's
ability to meet this new deadline," he added.
The local currency closed slightly stronger last week at Rp
7,625 compared to Rp 7,663 the previous week.
The index dropped 2.5 percent last week to close at 556.78
points, down from 570.81 the previous week. The daily average
transaction value decreased to Rp 374.28 billion last week,
compared to Rp 483.2 billion during the previous week.
The daily average turnover also decreased to 307.4 million
shares from 337.3 million shares the previous week.
Last week's top gainers were PT Maskapai Reasuransi, whose
shares jumped by 53.85 percent, PT Mitra Rajasa by 38.46 percent
and PT Inter-Pacific Bank by 33.33 percent.
PT Telkom announced last week that it would distribute
dividends of Rp 53.87 per share between late May and early
November this year.
The week's big losers were PT Kridaperdana Indahgraha, whose
shares fell by 43.55 percent, PT Super Mitory Utama by 31.25
percent and PT Sepatu Bata by 27.09 percent.
Top brokerage firms by transaction value were PT Vickers
Ballas with Rp 295.57 billion in transactions, PT Credit Lyonnais
with Rp 168.71 billion and PT Danareksa Sekuritas with Rp 139.70
billion. (udi)