Equity investors shift focus to corporate news
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.