Hopes on IMF loan fail to boost market sentiment

JAKARTA (JP): The country's financial markets remained weak yesterday with the rupiah closing lower again against the U.S. dollar and stock prices on the Jakarta Stock Exchange (JSX) down 1.7 percent.

Currency dealers said that hopes for the quick release of the International Monetary Fund (IMF)-arranged loan for Indonesia did not help boost market sentiment.

"Despite hopes over the IMF funds, the market remains anxious over the country's political situation," a dealer with a local bank said.

The rupiah strengthened to 11,400 against the American dollar in early trading, according to dealers, in response to the IMF First Deputy Managing Director Stanley Fischer's statement that the fund might resume the release of the fund "reasonably soon" to bring Indonesia out of its economic catastrophe.

"But the positive news on the IMF's loan disbursement was overshadowed by the country's political uncertainty," the dealer said.

Around 3,000 protesters, mostly students and supporters of opposition figure Megawati Soekarnoputri, rallied outside the House of Representatives building yesterday. They demanded that former president Soeharto be tried for corruption and called on President B.J. Habibie, who took over power from him last month, to quit.

Dealers said such political activity sent the rupiah down to close at 11,750 against the American dollar in the Jakarta spot market, slightly lower than its close at 11,600 the previous day.

Dealers said that trading on the rupiah was still moderate as most market operators, who have taken a wait-and-see attitude, were still digesting the country's political and economic programs to improve its worst crisis in decades.

Dealers said that the rupiah was likely to continue to falter against the greenback in the days ahead, particularly if the political turmoil deteriorated.

"If there are more demonstrations the rupiah will sink again," the dealer said, adding the currency might drop to as low as 15,000 to the U.S. dollar.

Stock prices on the JSX mirrored the currency's bearish trend with the main price index falling 6.99 points to 392.60 points, with 290.15 million shares worth Rp 300.37 billion (US$27.30 million) changing hands.

Stockbrokers said that the fall of blue chip stocks like PT Telkom, Indosat and Tambang Timah, which are cross listed on overseas exchanges and account for around 30 percent of the market capitalization on the local bourse, and stocks linked to Soeharto's family and cronies, led the fall.

"Trading activities remain sober as most investors are still scared to put funds into the local market," according to a broker with Bali Securities.

Brokers said mounting market fear over a possible probe into assets of companies linked to Soeharto's family and associates was prompting most investors to dump the stocks.

The price of noodle maker Indofood Sukses Makmur, controlled by the Salim group, a long-time ally of Soeharto, shed Rp 75 to Rp 1,075 on 33.65 million shares, the price of toll-road operator Citra Marga Nusaphala Persada, controlled by Soeharto's eldest daughter Siti Hardijanti Rukmana, slid Rp 25 to Rp 350 on 9.35 million shares, while the price of cement maker PT Indocement Tunggal Perkasa rose Rp 725 to Rp 3,600 on 1.6 million shares after falling to an intraday low of Rp 2,800 and Bimantara Citra, controlled by Soeharto's second son Bambang Trihatmodjo, rose Rp 25 to Rp 325 on 9.94 million shares traded.

An analyst with a local securities firm said that trading on the local bourse would continue to remain sluggish until the IMF disbursed its loan to Indonesia. (aly)