Jakarta market dormant on lingering uncertainties

Jakarta market dormant on lingering uncertainties

JAKARTA (JP): The Indonesian financial markets remained
sluggish yesterday with the rupiah barely moving and the stock
market ending slightly higher on a lack of incentives and worries
over political uncertainties.

Currency dealers said the rupiah touched a day low of 15,200
in early afternoon trading following news reports that the
political situation in East Timor was on the boil.

"East Timor has become a hotspot again, with all news wires
filing extensive reports about demonstrations and instability
there. The market is quite nervous," a dealer with a local
private bank said.

The rupiah ended at 14,800 on the Jakarta market, little
changed from Friday's close of 14,700.

"Nothing, but intervention, can spur the rupiah. In this very
thin market, even $10 million can move the market significantly,"
the dealer said.

"So, if the central bank can use some of the US$1 billion of
IMF money for intervention, I'm sure it will take the rupiah to
the 10,000 level in a very short time, provided there are no
negative developments on the political front."

Last week, the government signed the second supplementary
memorandum of economic and financial policies with the
International Monetary Fund (IMF).

Under the new deal, the government and the IMF projected that
the rupiah would settle by the end of the year at 10,000 to the
dollar.

The deal was a prerequisite for the IMF to disburse $1 billion
in a balance of payment support loan to Indonesia. The $1 billion
is part of the $43 billion bailout arranged by the IMF to help
salvage the country's battered economy.

The stalled rupiah made stock trading on the Jakarta Stock
Exchange (JSX) lethargic the whole day, stockbrokers said.

Stock prices made a very slight gain of 0.08 percent, with the
JSX Composite Index closing 0.361 points higher at 431.231.
Turnover totaled 189.17 million shares valued at Rp 130.32
billion (US$8.5 million).

A broker with a local brokerage said the market was still
trading thinly with even large-cap stocks like state
telecommunications firm PT Telkom trading modestly.

Telkom stayed unchanged to close at Rp 4,050.

Bahana Securities' associate director and head of equity sales
Andre Cita said the market was pretty flat because most foreign
investors were watching from afar due to a lack of good news
here.

"I think they're going to be sidelined for a while until we
get more positive news. Right now, it's pretty neutral, not much
bad news except for developments in East Timor," Cita said.

It was reported at least one person was killed and five were
wounded in East Timor yesterday when Indonesian security forces
clashed with protesters demanding independence for the troubled
territory.

The protest was held in the town of Baucau after three
European ambassadors arrived there as part of a review of the
political situation in the province.

Cita said there were lingering concerns over East Timor which
could drag down the market in the next few weeks because any
negative developments in the country's youngest province could
frighten away investors.

He warned that political instability could stall everything,
including the implementation of the reform program agreed with
the IMF.

"We hope everything will go smoothly. But even if everything
goes right, it is still difficult for the country and for the
citizens," Cita said.

It needs a bit of positive news to fuel the market, which is
heavily burdened with a lot of uncertainties, he said. (rid)