Financial markets extend their gains on IMF loan news

Financial markets extend their gains on IMF loan news

JAKARTA (JP): The Indonesian financial markets extended their
gains yesterday, with the rupiah improving to 14,350 against the
dollar and stock prices rising 0.7 percent on the back of
stronger regional markets and improving domestic sentiment,
analysts said.

They said most regional currencies and stock markets were
firmer yesterday, giving a boost to the domestic market which was
already on an upward trend due to a number of pieces of good
news.

News which brightened the day included the positive market
reaction to the Indonesian interbank debt settlement proposal and
President B.J. Habibie's optimism that the International Monetary
Fund (IMF) would release the next US$1 billion installment of
loans which it has agreed to provide to Indonesia.

"All news was positive today and the market also reacted
positively. But I don't know how long this positive sentiment
will last," a currency dealer with a local private bank said.

He said the rupiah strengthened Rp 200 to close at 14,300/400
against the U.S. dollar on the Jakarta spot market yesterday, up
from Tuesday's close of 14,550.

The relative strength of the rupiah was also supported by Bank
Indonesia's determination to maintain the interest rates payable
on its one month promissory notes at 70 percent per annum, the
dealer said.

Nevertheless, the strengthening Japanese yen and news about
possible resumption of payments from the IMF dominated the
market, he said.

The IMF's executive board met yesterday in Washington and was
widely expected to authorize the release of the next $1 billion
tranche of aid to Indonesia.

Looking ahead, dealers said the release of the money could
lead to a further strengthening in the rupiah, but dollar buying
by local banks to finance imports would prevent a spectacular
rally.

A stronger rupiah and the improving regional market caused
share prices on the Jakarta Stock Exchange (JSX) to gain 0.7
percent, with the JSX Composite Index rising 3.465 points to
close at 467.339.

Trading turnover totaled 463.45 million shares with a value of
Rp 550.36 billion (US$38.8 million).

Gainers led losers by 68 to 33, with 89 stocks unchanged.

Stockbrokers said local investors dominated trade, buying in
the morning and then taking profits in the afternoon.

Pentasena Arthasentosa's head of research Mohammad Syahrial
said local investors chased stocks in state mining firm PT Aneka
Tambang and state cementmaker PT Semen Gresik.

"Buying euphoria on Aneka Tambang and Semen Gresik also
contributed to the rise in the main price index today
(yesterday)," Syahrial said.

Trading in Aneka Tambang shares was spurred on last week by
rumors that the government has found a foreign buyer for its
stake in the company. But an official at the State Enterprises
Ministry said on Tuesday that this was not true.

Shares in Aneka Tambang were again actively traded yesterday
amid rumors that it would be merged with state tin mining company
PT Tambang Timah, brokers said.

Aneka Tambang shares rose Rp 50 to close at Rp 2,525 on 68.9
million shares changing hands.

Syahrial noted that based on his analysis using a "discounted
free cash-flow" approach, Aneka Tambang should be priced at
around Rp 3,000 per share.

Stockbrokers said local investors chased Semen Gresik stock
after it was rumored that three new bidders for the company had
offered higher prices than the bid submitted by Mexico's Cemex SA
for the government's stake in the company.

Cemex had offered $1.38 per share for the 35 percent
government stake in Semen Gresik.

Semen Gresik gained Rp 350 to close at Rp 11,950 on 1.3
million shares traded.

Besides domestic investors's speculative trading on the two
stocks, Syahrial said that foreign investors were also buying
into "defensive stocks," namely stocks of companies in the
consumer, mining, retail, and pulp and paper sectors.

Nevertheless, Syahrial warned of a possible downturn in the
market because "fundamentally the market is quite expensive now."

Large-cap stocks had mixed fortunes yesterday, with state
domestic telephone monopoly PT Telkom slipping Rp 25 to Rp 4,350,
state satellite operator PT Indosat dipping Rp 350 to Rp 15,500.

Cigarette giant PT Gudang Garam was down Rp 150 to Rp 8,200,
while rival PT HM Sampoerna rose Rp 100 to Rp 2,500. (rid)