Foreign presence on JSX expected to remain strong

JAKARTA (JP): Trading on the Jakarta Stock Exchange (JSX) is expected to remain strong this week, with foreign investors likely to further dominate trading activities.

Securities analysts said over the weekend that the presence of foreign investors would remain strong and that there was no reason for them to pull out at this time.

"Many prices are undervalued. So it is time to buy," one analyst said.

Fears over possible unrest during campaign activities have lessened, even though there have been some incidences during the campaigning, a Harita Securities executive said.

DBS Securities estimated that some investors would focus on second and third line stocks, especially newcomers, on speculative buying.

Among newly listed companies are PT Asia Inti Selera, which is expected to make its capital market debut on May 15, and Eterindo Wahanatama on May 16.

The JSX composite index ended on a firm note last week to close at 673.69 against the previous week's close of 647.89.

Total daily average volume was 228.69 million shares worth Rp 455.28 billion (US$189.70 million), compared to last week's 292.2 million shares worth Rp 534.11 billion ($222.5 million).

Brokers attributed such low transaction volume and value to the holiday on May 8. The market was closed on May 8 in the observance of the Islamic New year and the Ascension of Jesus Christ.

Although worries of possible political unrest during the campaigns had lessened, analysts said that some investors would still take a wait-and-see attitude until results of the election are announced.

The government said last week that campaigning for the May 29 election had no effect on Indonesia's economy.

Economic indicators showed that foreign exchange reserves held by the central bank reached a record $20.4 billion in April which was sufficient to finance 5.3 months of imports, while the inflation rate was checked at 0.56 percent in April, lower than the 0.78 percent recorded in April last year.

As a result, the accumulative inflation rate for the January- April period this year was 2.52 percent, lower than the 4.04 percent recorded during the corresponding period last year.

"Such economic indicators encourage foreign investors to invest in the local exchange," the Harita Securities executive said.

Analysts earlier predicted that campaign activities, started on April 27 and ending on May 23, would have short term effects on foreign currency and stock trading activities.

Last week, the Jakarta bourse saw a lot of foreign buying on several blue chip stocks, including Telkom Gudang Garam, HM Sampoerna and Bank Negara Indonesia.

Telkom rose by Rp 400 to Rp 3,850, while Indosat was up Rp 325 to Rp 7,100. Cigarette maker HM Sampoerna was up Rp 400 to Rp 10,000, while competitor Gudang Garam went up Rp 900 to Rp 10,550.

Bank Negara Indonesia climbed by Rp 100 to Rp 1,550, BII added Rp 150 to Rp 1,875 and BDNI surged by Rp 300 to Rp 2,725. (09)