Holiday to stall index upward trend

Holiday to stall index upward trend

The Jakarta Post, Jakarta

Trading on the Jakarta stock market is expected to be slow
this week ahead of religious festivities, putting a brake on last
week's rising trend.

"The trend will be reversed amid thin trading volumes. This is
common every year when the long holidays draw near," Ferry
Latuhihin, a stock and currency analyst with Danareksa
Securities, told The Jakarta Post on Friday.

Investors would wait on the sidelines ahead of the long
holidays, starting with the Idul Fitri Muslim festival. The
Jakarta Stock Exchange will be closed starting Thursday and will
resume trading on Dec. 11.

The index has been steadily on the rise over the past weeks
thanks to good news from inside and outside the country, with the
index closing at 390.42 points last Friday, or 2.4 percent higher
than the previous week's close of 373.23.

Daily trading volume averaged 357.68 million shares valued at
Rp 350.13 billion (US$38.9 million) last week, compared with
592.2 million shares valued at Rp 282.9 billion the previous
week.

Domestically, the progress in the Bali bomb probe, coupled
with relatively better macroeconomic fundamentals, as evidenced
by manageable inflation and a stable rupiah, have so far managed
to convince market players that the country is crawling back to
its feet from the slump that followed the Bali massacre.

On the external front, the U.S. Federal Reserves' move to cut
key interest rates to 41-year lows early in November buoyed up
Wall Street. The Wall Street rally was followed by its regional
peers as hopes of a U.S. economic recovery ran high.

"The index's recent upward trend must be attributed to those
factors. The (U.S.) rates cut, which drove Wall Street to rally
for seven consecutive weeks, along with our country's sound
fundamentals and the Bali probe progress have all proved helpful
for our index," Ferry said.

"So, although the market is expected to be slow in the near
future thanks to the holidays and other factors, in the long run
the index still has a good chance of climbing towards the 400
level."

Aside from the long holidays, another stock dealer said the
market would be lackluster this week as players were still
waiting for the latest news on the government's plan to privatize
state-owned telecommunications firm Indosat.

The government has said it is committed to finalizing the sale
of a 42 percent stake in the country's second largest
telecommunications company by year-end.

As for the currency market, the rupiah will remain stable at
around 9,000 per dollar due to supply and demand equilibrium, a
currency dealer said.

"The rupiah will be moving in a relatively similar range to
last week, that is, around 9,000, although there is still a
chance for the currency to slightly strengthen," he said.

Ferry shared this view, saying that the local unit would not
fluctuate wildly.

"There is no speculative trading these days. Trading is simply
taking place on a real-demand basis. So, the rupiah is going to
be stable this week," Ferry added.

Last week, the rupiah closed at 8,975 against the U.S. dollar,
a little stronger than 8,995 the week before.