Foreign capital flows to JSX set to continue
Foreign capital flows to JSX set to continue
Berni K. Moestafa, The Jakarta Post, Jakarta
Foreign investors may continue to make use of their inroads
into the local stock market this week by keeping the index up and
rising, although local investors looked set to unwind their
gains, analysts said.
According to estimates by Sekuritas Ahmad Subagja, an
investment analyst at Niaga, the stock market looks set to book
more gains -- albeit at a pace weaker than in the previous weeks.
Foreign capital inflow might recede, he said, while selling
pressure from local investors could increase.
"There is still a good chance for blue chips shares," Ahmad
told The Jakarta Post Saturday.
The Jakarta Stock Exchange (JSX) Composite Index breached the
significant barrier of 450, soaring to 452.46 on Friday from just
426.41 a week before.
Analysts attributed the JSX's steady gains to the so-called
"January effect," wherein investors build up their portfolio anew
at the beginning of the new year.
Ahmad said that stock markets in Thailand and the Philippines
had reported the same influx of foreign capital.
Indonesia, Thailand and the Philippines, he said, "have long
been left out by foreign investors, now they return over apparent
renewed confidence in them," he explained.
What attracted foreigners most were the cheap stock prices of
some of the regions' companies, now still undervalued, he said.
Foreigners "are here to stay for at least another few weeks,"
said analyst Edy S. Widjoyo of Ciptadana Sekuritas.
According to Edy, investors would likely wait until trading at
the JSX is volatile enough before they pull out.
An active market permits stock prices to rise quickly,
allowing early birds to book hefty profits -- but often at the
expense of late investors, or "those local investors who have
been shying away from the market, and are lured back by the JSX
gains," Edy said.
He saw a meaty five percent rise in the JSX index this week,
provided local investors stood their ground and not take a profit
yet.
Among the firms being eyed by investors, he said, were state
telecommunications companies PT Telkom Indonesia, and PT Indosat.
Their shares have remained strong, despite news of protesting
Telkom workers threatening to break a strategic deal between the
two.
The deal requires Telkom transfer its fixed-line assets in
Central Java to Indosat in exchange for a 35 percent share in the
country's biggest cellular phone operator, PT Telkomsel.
As the deal demands the consent of Telkom employees in that
region, chances are good that both companies will scrap the deal.
Telkom might have to pay Telkomsel's 35 percent in cash, which
Edy said was worth US$375 million.
But Indosat might prefer a cash payment, as it did with
companies that had more investment flexibility, he said. "This
news is already reflected in their stock prices," he added.
In the currency market, Bank Buana Indonesia director Pardi
Kendy predicted no major changes for the rupiah this week.
He said that the local unit had been staying at a trading
range of between 10,300 to 10,500 against the U.S. dollar over
the past few weeks.
The rupiah has shown itself as still weak but relatively
stable, despite Bank Indonesia steadily easing its benchmark
rates, which add pressure to the unit.
But now there were signs of a rise in corporate dollar demand
that could push the rupiah beyond the 10,500 mark, Pardi warned.
"This should signal to Bank Indonesia to be more careful in
lowering its interest rates," he added.