Fischer visit to influence JSX this week: Analysts
JAKARTA (JP): The outcome of the meeting between the International Monetary Fund (IMF) executive, Stanley Fischer, with President Abdurrahman Wahid on Monday will determine the direction for share trading of the Jakarta Stock Exchange (JSX) this week, equity analysts said.
"We are anxious to hear how the meeting will turn out. If it is good, it will be positive for the market," said Lukman Hakim, the associate director at Ludlow Securities.
Stanley Fischer, the fund's acting managing director, arrived on Sunday to meet with Abdurrahman and senior economic officials to review the country's economic programs.
"The main reason for my visit is to reassure President Wahid of the IMF's support for Indonesia's economic program, and to review its progress with him," Fischer said in an arrival statement.
Lukman said the JSX needed to see the Indonesian government stand up to its commitments as set out in the IMF's letter of intent, while continuing to implement the necessary economic reform programs.
There was some negative sentiment in the market as investors were still worried about the government's ability to meet its reform measures as agreed on in the government's letter of intent to the IMF on Jan. 20, Lukman said.
Fischer, however, said the IMF had a more positive view and that they were encouraged by recent positive developments in the implementation of the program, including the framework for corporate debt restructuring and the favorable Paris Club meeting.
Lukman said the other factor weighing on JSX trading this week would be investors' speculation on possible U.S. interest rate hikes as the U.S. government would likely preempt the possible increase in the inflation rate on the country's strengthening of consumers' buying power.
The continuing decline of the unemployment rate in the United States will soon cause workers' wages to go up, thereby creating upward pressure on inflation in the economic powerhouse, said another analyst.
"If the United States raised its interest rates, we would have to do the same to protect the rupiah's value to the greenback, but, of course, at the risk of hurting the stock market," Lukman said.
If rupiah interest rates were not raised, the local currency's value against the dollar would be pressured otherwise, and in turn would certainly weigh on the JSX to a great extent, Lukman said.
Currency dealers said the rupiah might breach its important psychological 8,000 level against the U.S. dollar this week amid the lack of funds flowing into the country.
"Last week the rupiah weakened against the greenback as local companies demanded more dollars to pay their maturing offshore debts this year," said one dealer.
The rupiah dropped last week to Rp 7,965 compared to Rp 7,625 the previous week.
The JSX index dropped 5.5 percent last week to close at 526.39 points, down from 556.78 the previous week. But the daily average transaction value increased to Rp 458.86 billion last week, compared to Rp 374.28 billion during the previous week.
The daily average turnover also increased to 533.7 million shares from 307.4 million shares the previous week.
Last week's top gainers were PT Cipendawa Farm Enterprises, whose shares were up by 19.23 percent, PT Sekar Laut by 17.65 percent and PT Indocement Tunggal Perkasa by 17.24 percent.
The week's big losers were PT JAPFA, whose shares fell by 45 percent, PT Putra Surya Perkasa by 33.33 percent and PT Sierad Produce by 28.57 percent.
JSX last week delisted PT Putra Surya Multidana and PT Fiskaragung Perkasa due to their bankruptcy status as declared by the court.
Top brokerage firms by transaction value were PT Vickers Ballas Tamara with Rp 287.97 billion in transactions, PT Ciptadana Sekuritas with Rp 210.48 billion and PT Danareksa Sekuritas with Rp 149.56 billion. (udi)