Investors likely to stay away from the market
Investors likely to stay away from the market
JAKARTA (JP): Analysts predicted share prices on the Jakarta
Stock Exchange (JSX) would lose ground this week in the wake of
President Abdurrahman Wahid's decision on Sunday to retain Gen.
Wiranto as coordinating minister for security and political
affairs.
The anticlimactic ending of the standoff between the two will
be received negatively by the local stock market, the analysts
said.
"Gus Dur's decision to retain Wiranto in the Cabinet creates
more uncertainty in the market," said Martin Panggabean, chief
economist at Bank Mandiri, referring to the President by his
nickname.
Martin said that although Abdurrahman's decision on Wiranto
was legally correct, the market would view it differently.
According to him, the market would see the move as proof of
strong pressure on Abdurrahman to retain Wiranto.
Equity analyst Dandosi Matram shared Martin's opinion, saying
the President's decision to retain Wiranto would keep investors
away from the market.
"Investors will stay away for some time until everything
(pertaining to Wiranto) is cleared," he said.
Abdurrahman on Sunday reversed his earlier demand that Wiranto
resign his post, agreeing to keep the general in his Cabinet
until the Attorney General's Office completed its investigation
into the violence in East Timor.
The President, however, denied his decision was a compromise,
even as analysts said the move dealt a blow to Abdurrahman's
credibility.
Abdurrahman said Wiranto must resign if the investigation by
the Attorney General's Office implicated him in the post-ballot
violence in East Timor last year.
Aside from the Abdurrahman-Wiranto stalemate, Dandosi said
investors, particularly foreign investors, continued to be of the
opinion that Indonesian politics was unpredictable, at least in
the medium term.
If the political elite continue with their infighting, that
will also increase the possibility of political instability, he
added.
"The Abdurrahman-Wiranto crisis might be over, but investors
are still anxious about how things will develop thereafter. Is
there another crisis coming soon," he said.
Dandosi said foreign investors would likely become net sellers
this week, and the JSX Composite Index would likely fall because
of Abdurrahman's decision to retain Wiranto in the Cabinet.
The rupiah, Dandosi said, would also be under pressure.
However, he said the disbursement of loans by the Consultative
Group on Indonesia and the International Monetary Fund would help
defend the rupiah.
He said there was an external factor besides politics which
would prevent the rupiah from returning to the 6,000 level
against the greenback.
"Political factors are not alone in burdening the rupiah. The
impact of the U.S. government raising its interest rates is also
an accountable burden," he said.
The JSX Composite Index advanced slightly last week to close
at 635.07 points, up from 634.99 the previous week.
The daily average transaction value rose to Rp 1.04 trillion
last week, compared to Rp 724.88 billion the previous week.
The daily average turnover also increased to Rp 1.14 billion
shares last week from 614.2 million shares the previous week.
Last week's top gainers were PT Concord Benefit Enterprises,
whose shares jumped 239.13 percent, PT Prima Alloy Steel (61.11
percent) and PT Mandiri Intifinance, which rose 55 percent.
The week's big losers were PT Transindo Multi Prima, whose
shares fell by 34.62 percent, PT Suba Indah (19.51 percent) and
PT Super Mitori Utama, which experienced an 18.18 percent tumble.
The top brokerage firms by transaction value were PT Danareksa
Sekuritas with Rp 454.31 billion in transactions, PT Trimegah
Securindolestari (376.03 billion) and PT Asjaya Indosurya
Securities with Rp 365.85 billion in transactions.
The rupiah appreciated by 3.1 percent to close the week at
7,288 to the U.S. dollar. (udi/rid)