Federal Reserve meet may boost the JSX
JAKARTA (JP): The Jakarta Stock Exchange (JSX) is predicted to perform softly this week unless positive news emerges from this week's U.S. Federal Reserve meeting.
"I think investors will stay sidelined on the first two days of the week while waiting for a decision to be made by the Fed whether to cut or to increase the U.S. interest rates," Lippo Securities' managing director, Kelvin Lee, told The Jakarta Post.
The U.S. Federal Open Market Committee (FOMC) is scheduled to hold a meeting on Tuesday.
"If the result is good news then the market will become stronger. But bad news will not necessarily cause an immediate big drop on the JSX," Lee added.
He said that because the JSX has been so stable over the past few weeks, investors will not easily panic on negative news, like an increase in U.S. interest rates.
"It is true that the Indonesian economy is strongly linked to the U.S. economy but it's not dependent on it any more," he noted.
Some analysts from Wall Street, as reported by Reuters, said that based on a survey of the nation's consumers, the American economy was not growing fast enough to require the Fed to raise interest rates.
It was reported that blue-chip stocks on Wall Street soared on Friday as the market cheered new economic data.
Lee said that the overall market situation of the JSX is not exciting. Investors may prefer to wait for new public offerings as there is no major forthcoming news on either the domestic or international economies.
"On the domestic situation, the Indonesian rupiah is now getting firmer. I also see upward pressure on domestic interest rates," Lee said.
"But from a positive viewpoint, I think it's still a good time to buy (shares) because the market is expected to move up after a recent stagnant period," he said.
A director of a local brokerage house, Nurkhamid Akhmad, predicted a weakening performance of second and third liner stocks.
"In addition to profit taking happening this week, the share prices of those stocks have also reflected any major plans to be carried out this year, such as the issuance of bonus shares or rights shares," Nurkhamid said.
"With expected very narrow price movements for big cap stocks and stable performance of the second and third liners, I think the situation will not change next week," Nurkhamid told the Post over the weekend.
Flat trading
Nurkhamid said that the JSX was very quiet last week also because of a lack of fresh news. The JSX composite index inched up 0.3 percent to 621 at the week close.
"I think it was Gudang Garam which pushed the market up," he said.
Gudang Garam advanced 11 percent to close last week at Rp 19,200 (US$8.1) from the previous week's close of Rp 17,200.
The JSX recorded total transactions of 321 million shares worth Rp 962 billion last week with only four trading days due to a public holiday on Thursday, as compared to 536 million shares valued at Rp 1.6 trillion in the previous week.
Foreign buy transactions amounted to Rp 609 billion, compared to the sell transactions of Rp 671 billion.
A supplier of electronic equipment, Astra Graphia, was recorded as one of top gainers, advancing 30 percent last week to close at Rp 3,450, on the news that it would enter the footwear business by acquiring 100 percent shares of Mitracorp Footwear of the Astra Group.
An analyst however questioned Astra Graphia's acquisition plan because based on a 1994 annual report, Astra International did not have any stake at Mitracorp.
Other top ten gainers included Panca Wiratama Sakti (which was up 46 percent), Panin Overseas (25 percent), Asuransi Bintang (20 percent) and Lippo Life (17 percent).
A textile manufacturer, Apac Centertex Corporation which, is now controlled by businessmen Bambang Trihatmodjo and Johanes Kotjo, lost 16 percent to Rp 2,200.
Apac was also recorded as the top active stock in volume with 5.7 million shares changing hands at Rp 13 billion.
The company plans to issue 16 for 4 rights shares to raise funds of up to Rp 408 billion, most of which will be used to acquire Apac Inti Corpora.
The most active stock in terms of volume and value was Polysindo Eka Perkasa, which recorded total transactions of 86 million shares worth Rp 147 billion.
Lee said that Polysindo has proposed to issue rights shares.
Other top stocks in transaction value were HM Sampoerna (with total transactions of Rp 86 billion), Indah Kiat (Rp 67 billion), Telkom (Rp 45 billion), Astra International (Rp 37 billion), Indofood (Rp 37 billion), Indocement (Rp 33 billion), Indosat (Rp 27 billion), CMNP (Rp 21 billion) and Bank Internasional Indonesia (Rp 18 billion). (alo)