Hopes on IMF loan fail to boost market sentiment
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)