Jakarta stock market seen active but a bit cautious
Dadan Wijaksana, The Jakarta Post, Jakarta
The Jakarta stock market is expected to remain bullish this week, although not be as active as it was over the past three weeks, which have seen the Composite Index jumping by nine percent, analysts predicted.
After pushing the Index sharply higher, the big players are remaining active but they will be erring on the cautious side while taking a breathing space on profit taking, Jasso Winarto of the Sigma Research Institute said.
"I can still see the prospect of the Index climbing by four or five points, but overall, I'd say the market will be more cautious this week," Jasso told The Jakarta Post.
The index jumped to a since-September record high on the back of huge gains in blue chip shares with foreign investors leading the buying spree in their continued efforts to build up their 2002 portfolio.
On Friday, the index of the Jakarta Stock Exchange ended higher for the eighth straight day at 426.41 points, up from 411.78 the previous week.
Analysts had previously said that the influx of foreign investors into the Indonesian market was a result of the so- called "January Effect" and would only have a temporary effect on the market.
However, two weeks of active trading may force the analysts to have second thoughts.
"What's been happening here is incredible. The hefty nine percent increase (in the index) is the highest in the world as far as the January Effect is concerned," Jasso said.
This could be a signal, Jasso went on, that the Indonesian market is slowly finding its way back onto investors' radar screens.
However, he said, with the impacts of a hefty hike in fuel prices looming large, coupled with the absence of other pro- market policies, the market movement would probably hover in a narrow range.
Roberto Pardede, a stock analyst with Bank Mandiri Securities, concurred, saying that there would not be any big surprises this week, although active trading was still likely.
"I believe there is still room for improvement for the index, but only by a slim margin," he told the post.
He added that the declining trend in interest rates on Bank Indonesia promissory notes would serve to increase positive sentiment in the market.
Meanwhile, the arrival of foreign investors in the stock market had helped the rupiah to remain relatively stable over the past two or three weeks, a currency analyst said.
Wiwan Widjaja of PT Vickers Vallas told the Post over the weekend that all the hype in the stock market had helped take the pressure off the local currency vis-a-vis the dollar.
"As foreign investors are converting their money into the local currency, this has definitely served to relieve the rupiah of its familiar pressure," said Wiwan.
The rupiah closed last week at Rp 10,400 against the American greenback, slightly stronger than the Rp 10,430 notched up the week before.
According to Wiwan, at least for the time being, the performance of the rupiah would depend on how long the foreign players would stay in the country.
The longer they stayed and were involved in active trading, the more stable the rupiah would be.
The local unit is predicted to hover in a familiar range of between Rp 10.300 and Rp 10.450.