Jakarta stock prices to remain weak this weak

Jakarta stock prices to remain weak this weak

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
are expected to remain weak this week as worries about
unfavorable third quarter results could further worsen market
sentiment.

Securities analysts said unfavorable financial reports
published by publicly listed companies last week would put
additional pressure on the already weak market.

"Foreign investors will continue to be on the sidelines of the
market as there is no fresh incentive to reenter the trading
floor," Tjandra Kartika, vice president of Mashill Jaya
Securities, said.

He estimated that more companies, especially those with large
foreign debt, would likely publish poor results on the third
quarter balance sheet.

Earnings of several large companies, such as Astra
International, Unggul Indah Corp and multifinance firm Putra
Surya Multidana, dropped sharply over the first nine months due
to large foreign exchange losses.

"There is no positive sentiment in the market. Things will
be the same as this past week," Hanafi Wongso, an analyst with GK
GOH Ometraco securities, said.

A business director of Asian Development Securities, Naotaka
Ikeda, said: "Investors have been very frustrated with the
current bearish market. There's nothing they can do and they'll
be even more disappointed with the unfavorable third quarter
corporate results."

Securities analysts also said investors would likely spend
their time this week watching the direction of the market while
digesting the impact of the IMF-led bailout package for Indonesia
to restore the economy.

"It means that it will be a long time before we return to
normal," one analyst said.

Most share prices on the JSX have lost about 50 percent of
their value since early July when the composite index was at its
peak of 740.83.

"Stock prices have been very ... very cheap. It's strange that
so few investors have benefited from the situation," the analyst
said.

The financial market was marked with the announcement by two
Indonesian conglomerates, the Danamon Group and the Salim Group,
that they would forge a strategic alliance in the banking
industry.

"The alliance is expected to boost trading of Bank Danamon
shares this week," one broker said.

Indonesia's second largest private bank, PT Bank Danamon --
beset by acquisition rumors -- announced Friday that it had
invited the Salim Group to be an equal partner in the listed
bank.

Bank Danamon, the Salim Group and Credit Suisse First Boston
said in a joint statement that Credit Suisse was also evaluating
a significant amount of equity investment in the bank.

"The 48 percent shareholder of the bank, PT Danamon
International, wholly owned by the Admadjaja family, has invited
the Salim Group to develop a strategic alliance by becoming a
major shareholder and equal partner in the bank," the joint
statement said.

Prior to the announcement on Friday, Bank Danamon's share
price rose 35 percent to Rp 650 the previous day, leading to the
trade suspension of the bank's stock on the JSX.

In a related development, the Indonesian financial market was
marked by a massive rush as most Bank Central Asia (BCA)
depositors withdrew their savings on rumors that the founder of
the privately run bank, Liem Sioe Liong or popularly known as
Soedono Salim, had passed away. The market rumors were wrong.

The JSX composite index fell 6.3 percent last week with the
main price gauge plunging 29.32 points to close at 436.83 last
week.

Last week's JSX price index showing was the second lowest
since 1990 when the index was at 417.79.

Total daily average turnover was 332.2 million shares in the
regular market last week against 376.6 million shares in the
previous week.

Total daily average value was Rp 338.58 billion (US$99.58
million) against Rp 466.37 billion in the previous week.

Most blue-chip stocks declined last week with
telecommunications firm PT Telkom slipping Rp 225 to Rp 2,800,
cigarette-maker Gudang Garam Rp 1,150 to Rp 8,500 and Sampoerna
Rp 325 to Rp 5,325.

Bank Internasional Indonesia fell Rp 100 to Rp 650, Bank
Negara Indonesia slipped Rp 50 to Rp 700 and Bank Dagang Nasional
Indonesia was unchanged at Rp 475. (aly)