Interest rate fears cast shadow on JSX
Interest rate fears cast shadow on JSX
JAKARTA (JP): Fears of a possible increase in American
interest rates is likely to continue to cast a shadow on domestic
stock trading activities.
Securities analysts said that share prices would remain under
pressure this week as most investors would stay on the sidelines,
waiting for the result of the U.S. Federal Reserve meeting.
The U.S. Fed is scheduled to hold its Federal Open Market
Committee meeting on May 25.
The analysts said over the weekend that factors which would
cause pressure on the local stock exchange would remain the same
as last week -- interest rate fears and estimated declines in
banks' earnings.
"Possible interest rate increases and poor performances of
banking stocks will remain the big issues this week," Edwin
Syuhrizal, from Amsteel Securities Indonesia, said.
Like other markets, the Indonesian stock exchanges, he
stressed, would be affected by any U.S. interest rate hike.
In addition to the interest rate fears, many investors will
also wait for the announcement concerning listed companies'
financial reports, said one analyst at DBS Securities Indonesia.
The JSX composite index dropped 10.73 points to 656.11 from
the previous week's close of 666.84.
Daily turnover averaged 183.4 million shares, down from the
previous week's 194.9 million shares.
Daily transaction values averaged Rp 413.10 billion (US$173.6
million) against Rp 441.96 billion ($185.7 million) the previous
week.
The stock index lost ground on heavy selling of blue chips
including Bank Negara Indonesia, PT Telkom, HM Sampoerna and
Gudang Garam.
The finance ministry's ruling on cigarette retail prices
issued late last week killed the buying mood on cigarette
producers' shares such as H.M. Sampoerna and Gudang Garam.
The ruling, which asked the cigarette producers to give
retailers a 10 percent margin, confused investors, one dealer
said.
"Investors thought that the cigarette firms were required to
set aside 10 percent of their profits but they were wrong," he
said.
The regulation precipitated heavy selling pressure on
cigarette producers' stocks, he added.
HM Sampoerna dropped by Rp 300 to close at Rp 11,050 but
Gudang Garam rose by Rp 25 to Rp 10,075
The central bank's low lending target also had a negative
impact on banking sector stocks.
"The low lending growth will curb the banks earnings," another
analyst said.
BNI dropped by Rp 25 to close at Rp 1,375, Lippo Bank by Rp
100 to Rp 2,450 and Bank Bira by Rp 175 to close at Rp 3,325.
Telkom's shares pushed the market heavily down on the news a
private company controlled by Bambang Trihatmodjo was planning to
operate in domestic market, previously the preserve of Telkom.
"Telkom's drop pushed the market down heavily," Edwin said.
Telkom dropped by Rp 275 to close at Rp 3,625.
Other losers last were Bank Pikko which dropped by Rp 75 to Rp
1,025 and Bank PDFCI which fell by Rp 325 to RP 2,250.
Last week's gainers, mostly second and third-line stocks,
included Sekar Laut which rose by Rp 450 to Rp 1,225, Sekar Bumi,
up Rp 575 to Rp 2,375 and Soedarpo Corporation, up Rp 225 to Rp
1,975. (09)