Foreigners remain net buyers of RI stocks

The Jakarta Post, Jakarta

Foreign investors were net buyers last week on the Jakarta stock market for the sixth successive week, helping the Composite Index increase by 2.4 percent.

Weekly data from the Jakarta Stock Exchange over the weekend showed that foreigners bought more stocks than they sold last week, buying a net of Rp 907.6 billion (about US$100 million) worth of shares.

The active purchasing by overseas investors helped lift the index to a close of 855.72 points, 19.81 points higher than the previous week's closing. On Tuesday, the index hit a record high of 861.318.

Coupled with domestic investors, the daily volume last week averaged 2.51 billion shares worth Rp 1.45 trillion, compared to 1.25 billion shares worth Rp 710.7 billion the week before.

Analysts have attributed the continued rise in the index to various events -- from the Oct. 5 official announcement that Susilo Bambang Yudhoyono won the presidential election and rising hopes of a new business-friendly Cabinet, the Fitch rating agency's decision to raise the credit-rating outlook on eight banks in the country, and the sale of a majority stake in Bank Permata.

The government has named a consortium led by the London-based lender Standard Chartered as the preferred bidder for Permata's 51 percent stake -- a sign that international investors remain keen on Indonesian assets. Also, the consortium agreed to pay some $300 million for the stake, higher that the government's target of $250 million.

Renewed concerns over international oil prices, and an explosion in front of the Indonesian Embassy in Paris, however, put a brake on the index's upward trend.

Skyrocketing oil prices showed no signs of easing last week, at one point reaching a 21-year high of $53 a barrel.

As for the explosion in Paris, concern eased on the news that it was a relatively small explosive device.

Going forward, unless there are fresh leads on Susilo's Cabinet, analysts believe the market could ease up a little, having already hit several fresh highs a number of times over the past couple of weeks.

Concern over world oil prices could also dampen sentiment in the market, an analyst said.

"I expect investors to stay on the sidelines because positive sentiment is fading and the price of oil has already reached $52 per barrel," Edwin Sebayang of Evergreen Securities told AFP.

Edwin added that the index could even drop slightly since investors tend to take profits before the start of the Muslim holy month of Ramadhan, which begins on Friday.

On the currency market, the local unit gained slightly by 0.7 percent to close the week at 9,090 per dollar. The central bank said last week it expected the rupiah to strengthen to below 9,000 per dollar toward the end of the year.