Indosat share sale to color trading

Indosat share sale to color trading

The Jakarta Post, Jakarta

Last week's sale of an 8.1 percent stake in international
cellular operator PT Indosat will color trading in the currency
and stock markets throughout the week amid continued optimism
over the government's reform program.

But familiar pressure in the form of high dollar demand from
corporations would likely stall the upward movement of the local
unit against the dollar, analysts said.

The market euphoria would continue to run high throughout the
week, but the rupiah was unlikely to break the psychological
barrier of Rp 9,000, they said.

The local currency rose to an eight-month high last week,
closing at Rp 9,080 against the dollar compared to Rp 9,280 the
week before.

Analysts attributed the good performance of the rupiah to the
upward trend of its regional peers, coupled with optimism
resulting from steps taken by the government to carry out its
privatization program and the divestment of local banks.

Still, the rupiah is seen as being hard put to break through
key resistance at Rp 9,000, and is expected to stay above that
level due to lingering concerns over corporate debts.

The key support levels for this week are set at Rp 9,050 and
Rp 9,125.

"The market will try to test the Rp 9,000 level, but I'm not
optimistic they will be successful," Ferry Latuhihin, currency
and stock analyst at Danareksa Securities, told The Jakarta Post
over the weekend.

Marking its first sale of state assets this year, the
government sold 8.1 percent of Indosat last week through a
private placement at a price tag of Rp 12,000 per share to raise
Rp 1 trillion as part of its privatization program.

The government has also set May 27 as the deadline for four
shortlisted bidders to submit offers for a 51 percent stake in PT
Bank Niaga.

Although the stake is worth only about US$10 million, the sale
will boost investor confidence that the country is moving forward
with its reform program.

Analyst Khalil Rowte pointed out that progress with the
government's economic reform program would help keep the rupiah's
movement on an upward trend.

The government's strong commitment to reform has been said to
be the main reason behind the strengthening of the local currency
over the past several months. Regaining their confidence in the
country, investors have been raising their investments here, thus
helping to pump up the rupiah.

Turning to the stock market, Ferry warned that market players
might be shocked to learn that the price of Rp 12,000 for the
sale of Indosat's shares by the government was Rp 600 lower than
the closing price of the share last week.

That could lead to a massive sell-off of the shares, which
would in turn drag down the Composite Index as well, Ferry said.

"However, the share price will eventually go back to the level
it should be in line with the company's performance appraisal,"
he added.

"The index should hover this week within a range of between
520 and 540 points, taking into account the overall positive
sentiment in the market."

The index closed the week 12.327 points, or 2.3 percent lower
than the previous week's close of 531.578.

Daily volume averaged 793.76 million shares valued at Rp 507.8
billion (US$55.89 million) compared to the previous week's
956.375 million shares worth Rp 492.91 billion.

State telecommunications firm Telkom closed the week down Rp
225 at Rp 4,050 rupiah. Cigarette maker Sampoerna lost Rp 175
over the week to close at Rp 4,275 while rival Gudang Garam
dropped Rp 450 over the week to Rp 11,100.