Index closes 2nd best in region

Index closes 2nd best in region

Rendi A. Witular, The Jakarta Post, Jakarta

The Jakarta Composite Index surged 63 percent higher this
year, as it wrapped up its year-long impressive performance by
breaking through the level of 700 on the last day of trading on
Tuesday -- the highest level in just under four years.

The Index also ended the year higher at 691.895 on Tuesday
from 424.945 at the start of the year, making it the second-best
performer in Southeast Asia, after Thailand's stock exchange in
terms of earnings in U.S. dollars.

The Index, however, failed to post another record-high on
Tuesday's trading as it ended lower by 0.2 percent, or 1.138
points from 693.033 on Monday, although for most of the session
it was traded higher and managed to pass the psychological level
of 700.960.

Analysts said late profit-taking in several bluechips had
driven the Index down, but the closing remained the highest since
Jan. 18, 2000.

President of the Jakarta Stock Exchange Erry Firmansyah said
that the sharp decline in the central bank's benchmark interest
rate and steady improvement in key areas of the domestic economy
had contributed to the increase in stock trading.

"The low interest rate has made the stock market more
attractive for portfolio investment, especially for those seeking
quicker and higher returns," said Erry on the sidelines of a
press conference on the year's stock market performance on
Tuesday.

He also said that the surge in the Index, coupled with the
listing of three giant state-owned enterprises, had contributed
to the jump in market capitalization, which had increased by
72.35 percent to Rp 463 trillion (US$54.4 billion), from Rp 268
trillion at the start of the year.

This year's improved Index performance was also reflected in
its average daily transaction value, which reached Rp 516.7
billion, higher than last year's average of Rp 429.2 billion.

For the full year, funds raised from companies' initial public
offerings had also increased to Rp 6.22 trillion from Rp 1.12
trillion last year, with only six new companies listed on the
stock exchange this year, from 22 last year.

The Index has also shown itself to be resilient this year,
even to terrorist attacks. The bombing of the JW Marriott Hotel
in the Mega Kuningan business district, South Jakarta, only
caused a temporary slide in the Index.

As for next year, Erry said that there was still room for the
Index to climber further above 700, because its price earning
ratio (PER) was still low compared with those bourses in
Malaysia, Singapore and Thailand.

A stock analyst with BNI Securities, Adrian Rusmana, said that
despite its limited direct impact on the country's overall
economy, the rally of the Index should be a measure to gauge
investor confidence in the country's economy.

However, he explained that it remained to be seen whether the
positive performance of the Index indicated the return of foreign
investors' confidence in the country.

Adrian said that the surge in the Index this year was mainly
caused by the rally trend on key global stock markets in response
to lower indicative interest rates around the world.

"The jump in the Index this year was caused mainly by global
sentiment. It cannot fully reflect the country's economic
performance," he said.

The stock market will be closed on Wednesday and Thursday for
the New Year's holiday, and will be back in business on Jan. 2
with President Megawati Soekarnoputri scheduled to mark the first
trading for the year.