Investors still concerned over currencies woes
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are predicted to remain under pressure this week because of investor concern over the domino effect on the Indonesian rupiah of the fall in the region's currencies.
Securities analysts said there would be a new buying impetus on the local stock exchange on certain stocks but selling would generally continue to dominate trading.
"The rupiah has not yet stabilized and trading activities on the local stock exchange will be in a narrow range," John Rachmat, a securities analyst from Schroders Indonesia said.
He said that if currencies such as the Thai baht and the Philippine peso stabilized, the Indonesian rupiah would follow suit.
"It means that if the rupiah is stable, investors' confidence will improve," he said.
Sales director of Asian Development Securities Naotake Ikeda said that he expected share trading would be mixed if not quite slowing down.
"The rupiah still remains the focus for investors. If the rupiah recovers, share prices will gain ground and vice versa," he told The Jakarta Post over the weekend.
"I expect the market to be quite slow this week because of the rupiah volatility," he said, adding there were not many incentives such as new government regulations to support trading activities.
Other analysts also reckoned trading would be "very dormant" and could be "the most quiet trading" of the year.
Chief economist of Lehman Brothers Asia Limited Arup Raha contended last week that although the rupiah had not stabilized yet against the U.S. dollar, the currency would soon recover as Indonesia's macroeconomic fundamentals were strong.
He said the rupiah's turbulence was caused by external factors, not the domestic macroeconomic fundamentals.
"The fundamentals of the Indonesian economy are very strong," he said.
Arup predicted the rupiah would stabilize between Rp 2,550 and Rp 2,600 against the U.S. dollar.
The governor of Bank Indonesia, Soedradjad Djiwandono, said last week that the central bank would continue to drain short- term rupiah from the market to discourage further speculation and boost the stabilization efforts to manage the supply of both dollars and rupiah on the market.
Analysts said that besides currency woes, the lower-than- expected results of some companies would also kill the buying mood.
"Some corporates have lowered their expectations due to the general election last May," Rachmat said, adding that cement maker PT Semen Gersik, for example, has yet to announce its lower-than-expected result on Monday.
"Most investors would be surprised to see the downward trend results of Semen Gersik," one analyst said.
The JSX composite index rose 11.71 points to close at 721.76 points last week from 710.05 in the previous week.
Average daily turnover rose 66 percent to 399.3 million shares last week from 293 million shares changing hands the previous week.
Average daily transactions rose 1.9 percent to Rp 622.96 billion (US$239.6 million) last week compared to Rp 611.26 billion in the previous week.
Blue chip stocks closed mixed last week with PT Telkom adding Rp 50 to close at Rp 3,975, Indosat gained Rp 400 to close at Rp 8,050, Gudang Garam rose Rp 500 to Rp 9,875 while cigarette maker HM Sampoerna slipped Rp 175 to Rp 9,050.
Bank Internasional Indonesia was up Rp 50 to close at Rp 1,850 while Bank Negara Indonesia fell by Rp 50 to close at Rp 1,475. (aly)