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)