Experts expect stock market to weaken this week
Experts expect stock market to weaken this week
The Jakarta Post
Jakarta
The Jakarta Stock Exchange Composite Index jumped last week by
six percent on the back of significant gains in blue chip shares,
but profit taking will likely push the Index down slightly this
week, according to analysts.
Stock analyst Jasso Winarto of the Sigma Research Institute
warned over the weekend that the Index's sharp increase would
only be temporary.
"For this week, after active trading, the Jakarta stock market
will take a breathing space on profit taking, waiting for things
to cool down," Jasso told The Jakarta Post.
The Jakarta Stock Exchange Composite Index gained six percent
during the week to break the psychological level of 400 points,
thanks to the active buying on blue chips shares by foreign
players.
The Index closed on Friday at 411.775 points, as against
385.201 points the week before, the highest level since September
last year.
The market also saw an impressive increase in the transaction
volume with a total of 2.78 billion share deals recorded during
the week, valued at Rp 3.02 trillion (about US$288 million).
In previous weeks, the average transaction value stood at Rp
1.5 trillion.
Foreign brokerages led the buying spree, pushing the index to
a record high as investors begin to build up their portfolios for
2002 early in the year, Jasso said, adding that this active
buying movement is known as the "January Effect."
The influx of foreign investors into the Jakarta stock market
was also made possible partly due to concerns over further
lowering of the bench-mark interest rate by the Federal Reserve.
However, Jasso believed that all the hype would die down this
week as the absence of positive sentiments and the country's
fragile macroeconomic situation would eventually push investors
away from the market.
A dealer at Cipta Mardika Hengky Sumarli shared the same view
with Jasso, saying that the market would be less active this
week.
"Before Indonesia, they (foreign investors) had made an impact
in other markets in the region such as Thailand and the
Philippines. And now they had picked Indonesia as their next
investment destination.
"They won't be around for much longer, so this week's market
will see a slight decline in the Index," Hengky told the post.
He was quick to add, however, the that the Index would not go
any lower than the supporting level of 400 points.
Meanwhile, the currency market is expected to remain stable
throughout the week with the rupiah to be traded in a narrow
range, once again isolating itself from active currency movements
worldwide.
Feri Latuhihin, a currency analyst at Danareksa Research
Institute, predicted the local currency would hover at relatively
the same level as over the last two months, regardless of what
happens in the region.
The deteriorating value of the Japanese yen against the
American greenback has raised widespread fears that it might put
pressure on other regional currencies.
However, Feri was convinced that at the moment, external
developments would pose lesser threat to the local currency than
internal ones.
The rupiah closed last Friday at Rp 10,430 against the U.S.
dollar, slightly weaker than 10,420 the previous week.