Investors play it safe over political disquiet

Investors play it safe over political disquiet

JAKARTA (JP): Trading activities on the local bourse are
likely to remain dormant this week as investors play it safe over
the country's political uncertainties, securities analysts said.

Head of research of Pentasena Securities Mohammad Syahrial
said that investors continued to fret over the nation's latest
political situation, as many students were still unhappy with
B.J. Habibie's appointment as the country's third president.

"Students feel that he is not appropriate to lead the country
because he is the product of the old system."

Habibie was sworn in as the country's third president on
Thursday last week following Soeharto's resignation after 32
years in power.

Syahrial said the political situation had improved within the
last several days but investors still felt uncertain about what
would happen in the coming days.

Investors, for the time being, would keep a wait-and-see
stance, he added.

"It is not that easy for foreign investors to put their funds
here until they are sure the country's political situation is
stable."

Due to that, he said, trading activities in the local
financial market would be stagnant this week.

Head of research of Mashill Jaya Securities Tjandra Kartika
agreed, saying that stock prices in the local market would remain
turbulent in the medium and long terms as foreign funds managers
were reluctant to put their funds here for political reasons.

Other analysts said that President Habibie's new cabinet
lineup -- announced Friday and sworn-in Saturday -- appeared to
have credible personnel, especially on the economic and finance
side, but the financial market seemed to have expected more
evidence that political reforms would be pursued.

"Though the market is rejoiced by Soeharto's resignation, it
expects President Habibie to pursue political reforms as demanded
by students and opposition leaders," Syahrial said.

But Baradita Katopo, an analyst of Usaha Bersama Securities,
said the newly installed Cabinet had yet to properly address the
economic problems including the country's mounting private
corporate debt and restoration of investor confidence in the
country's dire economy.

"The market wants the government to make clear-cut measures to
address the country's economic and political problems."

Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita said yesterday the new government had
received support from the International Monetary Fund (IMF) and
Indonesia's main donor countries such as the United States and
Japan.

"The economic team in the new Cabinet is still committed to
the reform program agreed to with the IMF," he said. He hoped the
disbursement of the next tranche in the IMF loan would be made
according to the original schedule.

Analysts said the loan-package brokered by the IMF would be a
key factor in the recovery of investor confidence in the country.

The IMF, spearheading a US$43 billion bailout package to
Indonesia, is to send a high-level team here this week to assess
current conditions.

"The disbursement of the IMF loan will depend heavily on
whether Indonesia implements thorough political and economic
reforms," one analyst said.

The JSX composite index rose 10.06 percent, or 40.79 points,
to 445.14 points last week from 405.14 the previous week.

Total average daily turnover declined by 57 percent, to 110.92
million shares changing hands last week from 261.92 million
shares the previous week.

Total average daily transaction value declined to Rp 107.10
billion ($10.52 million) last week from Rp 277.35 billion the
previous week.

Most blue-chip stocks rose last week. Astra International, the
country's largest automaker, climbed by Rp 100 to Rp 1,150,
cigarette-maker Gudang Garam by Rp 1,475 to Rp 8,750, HM
Sampoerna by Rp 575 to Rp 4,300, Telkom by Rp 325 to Rp 3,825 and
Indosat by Rp 3,200 to Rp 15,300. (aly)