Equity investors shift focus to corporate news

By Berni K. Moestafa

JAKARTA (JP): With politics losing its driving force behind the country's financial markets, investors at the Jakarta Stock Exchange (JSX) are shifting their focus to corporate news, analysts have said.

Most investors have lost interest in trading on speculation of current political developments, the analysts said.

Currency analyst Fajar Hidayat at PT Trimegah Securities said the focus of investors' attention would be on individual stocks.

"Most will want to pay attention to individual stocks as they expect more from annual shareholders meetings in June," Fajar told The Jakarta Post over the weekend.

With many financial reports for 2000 already out, companies are due for their annual shareholders meetings. Fajar said investors hoped to draw on more clues from these meetings.

During this week's trading, he continued, investors would look out for blue-chip companies in the telecommunications and cigarette sectors.

The media sector is another one to watch out for, he said.

Fajar said investors would monitor the progress being made during the legislators' debate over a new broadcasting bill.

If deliberated, the bill could pave the way for foreign investors to own local television companies. "Allowing foreign ownership in the television industry could incite other television firms to go public," he explained.

He said that thus far the media industry made up only about 0.6 percent of the stock exchange's total market capitalization.

"That is very small compared to about 6 percent in countries like South Korea, Malaysia and Thailand," he said.

The only listed media companies are publishing firm PT Tempo Inti Media and television company PT Indosiar Visual Mandiri.

Foreign investors could mark their first entrance into the local television industry with Indosiar. The government, which is the majority shareholder in the company, is set to offer its stake to several foreign investors.

Fajar said the broadcasting bill also had its downside, with one of its articles banning cross-ownership in the media industry.

"This would hurt the shares of Bimantara, which has a stake in several media companies," he said, referring to PT Bimantara Citra. The company owns a stake in local television RCTI and MetroTV.

The ban also runs against the regional trend of companies owning shares in several types of media, he went on.

"The bill isn't fixed yet, so we hope legislators revise the article on the cross-ownership ban," he said.

Aside from corporate news, he said, investors also remain alert on the impact of a government decision to hike fuel prices.

The government went ahead with the increase in fuel prices on Saturday, despite concerns it may worsen three days of rioting by factory workers in several cities.

The riots have already led the government to postpone the fuel price hike by one day.

But just as the riots subdued, protesters took to the streets again demanding the fuel price hike be canceled. The West Java capital city of Bandung, which was among the worst hit by the labor riots, saw its second wave of violence within one week.

Nonetheless, Fajar said the markets were not yet too concerned about the prolonged riots across the country.

"The market has anticipated the social impact of the fuel price hike," he explained.

On the political front, President Abdurrahman Wahid's move to replace his chief economic minister last week, was largely ignored by the market.

With less than two months ahead of the People's Consultative Assembly's special session, many doubt the effectiveness of a Cabinet reshuffle.

Stock and currency investors have decided to wait out the six weeks leading up to the Assembly's special session, which could see the formation of a new government.

The Assembly is likely to impeach President Abdurrahman Wahid over incompetence and two financial scandals.

For this week, Fajar estimated that trading would remain flat to slightly higher. "The chances for the index to drop are relatively small," he said.

He estimated that the JSX Composite Index would hover at a range of 394 to 424.

The JSX Composite Index closed last week's trading at 417.56, up from 398.811 the week before.

Prasti Rindrawati, a dealer at a local brokerage, said she expected more profit-taking to impact the stock market.

According to Prasti, if the index slips below the level of 400, most investors would start to cash in on the index's earlier rise.

"Four hundred is the current support level, that's where the testing ground will be," she said.

In the currency market, the rupiah has remained in a tight trading range over the past two weeks. The local unit enters its second week at a level of 11,200 to the U.S. dollar.

Last week the rupiah ended at 11,247, a notch lower compared to the previous week's closing of 11,200.

Foreign exchange dealers expect the rupiah to remain range bound for the rest of the week, given the absence of fresh leads in the political front.