Fear for possible riots still clouds stock trading
Fear for possible riots still clouds stock trading
JAKARTA (JP): Widespread rumors of massive riots ahead and
after yesterday's Independence Day celebration would continue to
cast a shadow on the local stock exchange this week.
Securities dealers said investors, many of whom were still
traumatized by the devastating May riots, would most likely
sideline the market until the rumors were proven untrue.
"Although there have been no reports about riots ahead of the
weekend, most investors still don't feel comfortable with the
country's social and political situation," head of research of
Trimegah Securindo Lestari David Chang said.
The Jakarta Stock Exchange (JSX) Composite Index gained ground
in extremely active trading Friday after weeks of falls.
Securities analysts attributed the rare increase in the price
gauge on the bullish sentiment in regional markets and the
"better than expected" security situation in the capital.
But they warned that Friday's active trading could not be
taken as an indicator for this week's activities.
"Though trading transactions rose by almost 500 percent on
Friday, it does not mean that investor confidence in the local
market has recovered," a broker with Mashill Jaya Securities
said.
Most securities analysts and brokers shared the common view
that positive developments on the social and political fronts
would certainly determine investor sentiment in the battered
local bourse in the weeks ahead.
"If there is no social and political riots early this week,
people will feel comfortable enough to enter the market again,"
Chang said.
"And this should improve stock prices on the local exchange as
many stocks have been oversold over the past few weeks," he
added.
Security officers were visible in most business and public
centers in Jakarta and other major cities across the country to
ensure security.
The associate director of state-owned securities house Bahana
Securities, Andre Cita, also said the positive sentiment in the
regional market would likely continue this week and such a good
atmosphere would also be felt on the local bourse.
But he said the fear of the possible unrest would remain a
major factor in this week's trading climate.
Trimegah's Chang said if there were no reports of riots on
Monday and Tuesday, the market would continue the weekend's
bullish sentiment.
But he warned that such an improved condition would be short-
lived because the fundamental factors of listed companies
remained very weak.
"Investors will be disappointed to see the poor financial
results of most companies in the first semester of this year as
an impact of the crisis," he said.
Financial setbacks due to the 80 percent depreciation of the
rupiah against the American dollar, bringing the rupiah to the
13,000 level compared to 2,500 before the crisis in July last
year, have caused dollar denominated debts of most listed local
companies to increase significantly when converted to rupiah.
"These poor financial results will certainly kill the buying
impetus," Chang added.
Most stock analysts and brokers said the rupiah's direction
would remain the most important factor in stock trading
activities.
"If there is an improvement in the rupiah, stocks will follow
suit," one of them said.
The rupiah closed slightly higher against the U.S. dollar on
Friday at 12,700 compared to 12,800 at close the previous week.
The country's financial market was closed yesterday to
celebrate the 53rd anniversary of independence.
The Jakarta Stock Exchange (JSX) Composite Price index closed
2.1 percent lower to 414.63 last week from 423.61 the previous
week.
Daily average turnover rose significantly to 277.88 million
shares changing hands on the regular market last week from 170.76
million the previous week.
Daily average transaction value rose sharply higher to Rp
440.41 billion last week from Rp 210.30 billion the previous
week. (aly)