Jakarta financial market extends gains on U.S. rate cut hopes
Jakarta financial market extends gains on U.S. rate cut hopes
JAKARTA (JP): The rupiah gained ground on Tuesday, closing
slightly firmer at 10,725 against the U.S. dollar, thanks to
market expectations of a U.S. interest-rate cut.
Stock prices on the Jakarta Stock Exchange (JSX) followed
suit, closing one point stronger at 276.00 after investors
started to pick up undervalued stocks, stock analysts said.
The rupiah opened at 10,900 and continued to strengthen in
moderate dealing while some market participants waited for the
outcome of the U.S. Federal Open Market Committee (FOMC) meeting
on interest rate policy,
"The market has expected a reduction in U.S. interest rates.
This boosts both regional currencies and global stock markets," a
chief dealer with a local private bank said.
The rupiah's close at 10,725 against the American dollar on
Tuesday compared to Wednesday's close at 10,875.
But market participants said political jitters might continue
to cap rupiah gains in the coming days.
The military beefed up its presence in the capital and other
major cities on Tuesday following speculation that there would be
a big demonstration to mark the anniversary of the country's
failed bloody communist coup on Sept. 30.
"The market has so far not yet been influenced significantly
by these talks of possible massive demonstrations," the chief
dealer said.
Trading turnover on the JSX totaled 295.66 million shares
changing hands valued at Rp 173.38 billion (US$16 million).
Gainers slightly outnumbered losers, 50 to 42, with 76 stocks
unchanged.
The head of research at Panin Securities, Anton Karlam,
attributed the slight increase in stock prices to market
expectations of a U.S. rate cut.
"I think this is the main reason for the increase," he said.
However, he noted that the country's economic and political
uncertainty would cause local trading to remain volatile.
"Investors are still scared to make any massive buying orders
as the country's long-term economic outlook remains bleak," he
said.
A stock broker with Trimegah Securindolestari said that most
buying orders came from domestic investors as foreign investors
stayed on the sidelines due to market talk of possible
demonstrations or riots.
Certain big cap stocks, which had been under persistent
selling pressure over the past few days, increased on Tuesday.
Cigarette giant PT Gudang Garam's stock price rose Rp 375 to
Rp 5,200 on 1,95 million shares traded and its competitor PT HM
Sampoerna up Rp 50 to Rp 2,225 on 2.23 million shares.
State-owned tin mining firm PT Tambang Timah gained Rp 175 to
Rp 4,475 on 859,500 shares changing hands.
However, market leader state-owned telecommunications firm PT
Telkom, which accounts for some 17 percent of market
capitalization, slid Rp 75 to Rp 1,625 on 4.56 million shares.
State-owned international call operator PT Indosat also dropped,
Rp 75 to Rp 5,600 on 710,500 shares.
And state-owned cementmaker PT Semen Gresik dropped Rp 1,075
to Rp 6,075 on 3.3 million shares on news that Cemex SA of Mexico
won the last round of bidding for a 14 percent government stake
in the company. (aly)