`Index to hover above 400 points'

Dadan Wijaksana, The Jakarta Post, Jakarta

While the gloomy sentiment resulting from the U.S.-Iraq standoff will likely continue to cloud the local stock market, some corporate actions are expected to drive the Jakarta Composite Index up slightly this week to hover above 400 points, an analyst said.

Jeffry Irawan of a Jakarta-based securities firm said on Sunday that the market would likely see several blue chip companies issue encouraging full-year financial reports, a move which could lead to a slight increase in the index.

"The market anticipates the reports to be promising. This will be enough to push the index up, although continued concerns over the situation in Iraq will limit the progress," Jeffry said.

Albeit limited, he added, the positive news, coupled with the fact that most of the market's top shares were relatively cheap, would enable the index to move near 405 points.

Last week, the index closed at 399.22 points, which was down about 0.75 percent from the previous week's closing at 402.24. The daily volume averaged 205.66 million shares, worth Rp 154.65 billion (US$17.4 million), compared to the average of 202.68 million shares traded the previous week with a value of Rp 201.5 billion.

The market will be closed on Monday in observance of the Islamic New Year.

Jeffry said that the financial reports were expected to be positive as the overall economy last year proved to have fared better than expected.

"But still, the main movers of the market will depend on the much-anticipated latest progress in Iraq," he warned.

The standoff between Iraq and the U.S. with its close allies has been hurting markets all over the world, creating jitters over the prospects of the global economy should a war break out.

The Jakarta market has been no exception, as fears of war have put the index, which previously was on the rise, under heavy pressure over the past few weeks.

The absence of fresh leads from the domestic front has also played a part in the index's depressed performance, he said.

In the currency market this week, the rupiah will maintain its weeks of steady movement against the U.S. dollar, as cautious investors wait for developments in Iraq.

The local currency strengthened slightly last week to Rp 8,890 to the U.S. dollar, compared to the previous week's closing of Rp 8,910.

Thanks to the central bank's quick response, the rupiah has been moving at a safe level, relatively unmoved by various stormy news, both internal and external.