IDB to support Indonesian stock markets
IDB to support Indonesian stock markets
JAKARTA (JP): The Islamic Development Bank (IDB) and
commercial banks from some Islamic countries have committed to
support Indonesia's stock markets by picking up some undervalued,
but quality stocks.
IDB portfolio director B.M. Qureshy, who led a group of
commercial bankers from Kuwait, Qatar, Sudan, Bahrain and
Malaysia on a visit here, said yesterday he believed that
Indonesia's fundamentals remained strong.
"The current stock market turbulence is caused more by market
sentiments than fundamentals. This is an opportunity to get in an
opportunity where we can get very good value in this stock
market," Qureshy said after meeting with Minister of Finance
Mar'ie Muhammad.
Mar'ie said the visit by IDB officials and executives of
commercial banks from Islamic countries was a follow-up of an
agreement between them and the minister during an IDB meeting in
Damascus last month.
At that meeting, it was agreed that IDB and some commercial
banks would help Indonesia get out of the current crisis by
investing in Indonesian stocks.
"They see our fundamentals as sound and believe that the
current stock market turmoil is only temporary," Mar'ie said.
"I said there were many undervalued but quality stocks. Their
prices have happened to drop. But for people with long-term
perspectives, this is the time to buy," he added.
A source with a state-owned securities house said that
initially the IDB and commercial banks would pool funds totaling
US$100 million to invest in local stock markets.
He said as they the carried the Islamic banner, they would
only buy stocks which would benefit the Moslem community at
large, not stocks of companies producing beer, for instance.
After meeting with Mar'ie, the delegation visited the Jakarta
Stock Exchange's trading floor.
Share prices on the exchange gained 3.3 percent, with the
composite index closing up 12.3 points at 368.68.
Trading turnover totaled 734 million shares on the regular
market valued at Rp 984.44 billion ($182.3 million).
Stock analysts said fading worries over President Soeharto's
health and news about plans from the IDB to buy local stocks had
encouraged investors to reenter the market.
"Such positive news gives domestic investors time to buy
certain selective stocks of companies with good fundamentals,"
managing director of Harita Securities Christina Lim said.
However, another analyst with a joint venture securities firm
said most foreign investors were still greatly concerned about
the President's health and political atmosphere in the country.
"Most foreign investors do not feel comfortable with the
political uncertainty in this country and the leadership crisis,"
the analyst, who asked not to be identified, said.
In the currency market, the rupiah stabilized against the U.S.
dollar yesterday on Bank Indonesia's intervention, dealers said.
They said the rupiah weakened to as low as 5,900 in the
morning session driven by Singapore operators, prompting the
central bank to step in the market to prevent the rupiah from
declining further.
"The central bank intervened at the 5,600 level yesterday
allowing the rupiah to recover to Rp 5,450," a local private bank
chief dealer said.
The spot rupiah closed at 5,450/5,850 compared with the
opening of 5,500/5,750.
But dealers said volume remained thin with total transactions
worth about $100 million yesterday.
"Basically the volume is small. But stability is still fragile
because people are now waiting for news from the government," the
chief dealer said. (aly/rid)