Jakarta market mixed on looming uncertainties

Jakarta market mixed on looming uncertainties

JAKARTA (JP): The rupiah will remain weak this week, while the
Jakarta Stock Exchange will see more buying activities after
profit taking ruled the market last week, according to some
analysts.

They said the rupiah was likely to trade at about 15,000 this
week despite news that the International Monetary Fund (IMF)
would disburse US$1 billion out of $43 billion bailout money it
had arranged for Indonesia.

"The rupiah should stay at a range of between 14,500 and
15,000 against the dollar next week (this week) because demand
for dollars will remain strong, especially from state banks. But
the trend of regional currencies will also factor in," said a
dealer with a local private foreign exchange bank.

The rupiah closed last week at 15,250 against the dollar, down
from 14,550 the previous week.

The dealer said the resistance level for the rupiah would be
13,500.

Another dealer with another local private bank said the market
had discounted the election of Akbar Tandjung as the new chairman
of the Golkar group, though it was positive.

He said the market had also discounted news about the possible
disbursement of $1 billion from the IMF, which he expected to be
this week.

"The market would rather wait for a further commitment of
between $4 billion and $6 billion by the World Bank and developed
countries to finance Indonesia's huge budget deficit," he said.

Securities analysts said the weak rupiah, high interest rates
and lingering political uncertainties would continue to
discourage potential investors to enter the local stock market.

Andre Cita, associate director and head of equity sales at the
state Bahana Securities, predicted that the market would make a
modest rise after a week-long profit taking.

"If we don't have any damaging events on the political,
economic and social fronts that break the silent, I would suspect
there would be more activities in the market, with upside bias,"
Cita said.

Cita said the market would not react excessively to the
election of Akbar Tandjung to the top post of Golkar because it
had been discounted.

"I think that's pretty much discounted by the market
regardless. I don't think it could play on it at this point
because there are still many things going on in the political
front," he said.

He also said the Indonesian market was quite unique and it
would not be easily influenced by regional weaknesses as other
regional markets were.

Noraya Soewarno, head of research at Vickers Ballas Tamara,
agreed and said the Indonesian market was initially saved by
double-listed state domestic telephone operator PT Telkom, which
accounts for 17 percent of market capitalization.

But now, the market is again saved by the government's
privatization plan on cement maker PT Semen Gresik and 11 other
state firms, she said.

Semen Gresik drove the market up when the government announced
on July 3 that it had selected Mexico's Cemex SA as preferred
bidder for a 35 percent government stake in the Indonesian
cementmaker.

Cemex offered $1.38 per share for the government stake. It
also offered the same price for a 16 percent public stake at
Semen Gresik.

Last week, the market was again saved by the state general
mining firm PT Aneka Tambang, which was rumored to be the next
company after Semen Gresik to have closed deals.

"If next week (this week), we see another announcement from
the government about its privatization program, we will surely
see a rise in the index," Noraya said.

The Jakarta Stock Exchange composite index closed last week at
463.581 points, down from 470.54 the previous week.

Daily turnover for the four-day trading week averaged 255.25
million shares worth $22.8 million, compared to an average of
341.56 million shares valued at $21.16 million the previous week.
(rid)