East Timor, Bank Bali to weigh on the bourse

By Wachyudi Soeriaatmadja

JAKARTA (JP): Developments in the Bank Bali scandal and conditions in East Timor will continue to dictate the direction of trade on the Jakarta Stock Exchange (JSX), securities analysts said.

An analyst from PT Istethmar Finas Securities, Lukman Hakim, said over the weekend the market would be effected by the reception received by the United Nations multinational peacekeeping force scheduled to arrive in East Timor early in the week.

"An early indication that the UN multinational force will succeed in its mission to restore peace in East Timor is needed for the stability of the local stock market," he said.

Hundreds of people have been killed and thousands have fled East Timor as a result of violence by prointegration militias allegedly backed by the Indonesian Military. The violence escalated after the results of the Aug. 30 ballot were announced, revealing a majority of East Timorese rejected autonomy within Indonesia.

Lukman believed trading on the stock market would remain flat because a resolution to the Bank Bali scandal remained uncertain, and it was unknown how the peacekeeping force would be received.

Dodi Prawira of PT Bapindo Bumi Sekuritas said the JSX index, which closed at 547.01 last week, could drop below 525 in the coming week.

"The index, however, will not breach the 500 level unless there is a new conflict following the arrival of the multinational force in East Timor," he said.

He also said the JSX would see an average daily transaction value of Rp 450 billion or below compared to Rp 501 billion the previous week.

Investors will stand back and see how the situation in East Timor develops, he said.

"Both sellers and buyers will just wait to enter the market," he said.

Investors believe selling stocks now risks losing the opportunity of a possible market rebound in the near future, he added.

He suggested investors focus on blue chips this week because these shares were more reliable during periods of volatility such as we are currently experiencing.

Lukman and Dodi also shared the view that the JSX would continue to bear the pressure of the unresolved banking scandal involving a questionable transfer of US$80 million from Bank Bali to a private firm linked to President B.J. Habibie's inner circle.

According to reports, the Bank Bali scandal has led to the International Monetary Fund (IMF) delaying its next loan disbursement to Indonesia.

The reports said the IMF postponed its review of the country's economic programs, automatically delaying the next loan disbursement.

The IMF was scheduled to review the economic programs in the middle of this month, which was to be followed by a $460 million aid disbursement in October.

Stock analysts, however, said the suspension of loans was necessarily temporary, because the IMF had too a large stake in the country's economy to allow it to fail.

The IMF is organizing a $46 billion bailout of the country's economy, of which the fund contributed some $12.3 billion. More than $10 billion of this money has been disbursed.

The JSX Composite Index fell 2.8 percent to 547.01 points last week from 562.77 points the previous week.

Daily average turnover last week was some 355 million shares, compared to 495 million the previous week.

Also on the decline was daily average transaction value, falling to Rp 501 billion from Rp 672 billion the previous week.

Last week's top gainers were PT Pool Asuransi Indonesia, rising 66.67 percent, PT Surya Semesta Internusa, which went up 41.67 percent, and PT Indospring, which ended the week 34.62 percent higher.

The top losers of the week were PT Sekar Laut with a 54.55 percent drop, PT Pudjiadi & Sons Estate, which took a 42.50 percent tumble, and PT Alumindo Light Metal, which fell by 23.64 percent on the week.

The top brokerage firms by transaction value were PT Syahrir Securities with Rp 527.7 billion, PT Vickers Ballas Tamara with Rp 414.1 billion and PT Credit Lyonnais Indonesia, which did Rp 249.2 billion in business.

Meanwhile, the rupiah closed at 8,230 against the U.S. dollar last week, an improvement over its 8,275 close the previous week.