Jakarta stocks expected to be mixed this week

JAKARTA (JP): Trading activities on the Jakarta Stock Exchange (JSX) are expected to be mixed this week with profit taking by local investors, securities analysts and brokers said.

They said foreign interest would be weak this week due to the three-day working holiday in Hong Kong.

"With the Hong Kong bourse closed next week, most foreign investors will be absent, but this will not necessarily mean a weaker market," an analyst with a joint venture securities house said.

The Hong Kong stock market will be closed for three days -- Monday to Wednesday -- to mark the transfer of sovereignty to China.

"But some secondary stocks might continue gaining on speculative interest," said Adnan Tan, sales director of Morgan Grenfell Asian Indonesia.

He said the absence of foreign investors this week did not necessarily mean weak trading activities in the local market as local investors had been strong over the past six months, especially on the second and third line stocks.

"The support of local investors is extremely good," Adnan told The Jakarta Post over the weekend.

Another analyst from a joint venture securities house agreed and said a stronger and increasingly active role by domestic investors over the past six months could compensate the absence of foreign investors.

Although the Hong Kong stock market is closed for three days, foreign funds from the United States and some European countries would continue venturing the JSX due to its strong economic fundamentals, Adnan said.

DBS Securities Indonesia said the macroeconomic fundamentals in Indonesia remained favorable, with inflation rates remaining in check.

DBS Securities said the World Bank Report "Sustaining High Growth with Equity" had undoubtedly showed the country's strong economic performance.

"Such indicators have strongly suggested that Indonesia is one of the fascinating markets," one analyst said.

The JSX recorded a new composite index high of 719.638 points last Monday largely because of heavy purchases by local investors, brokers said.

The JSX composite index climbed 4.61 points to close at 716.83 points last week from 712.22 the previous week.

Total average daily volume rose 18 percent to 373.2 million shares changing hand last week from 314.78 million shares the previous week.

Total average daily transaction value also increased by 4 percent to Rp 642.48 billion (US$267.7 million) last week from Rp 613.68 billion the previous week.

Analysts said the possible weakening transaction activities this week did not necessarily push the index down.

"We have even projected the JSX composite index will go higher in the coming weeks," said a senior dealer with Asian Development Securities.

"We expect this will reach 750 in the next few weeks," she said.

But most brokers said the index would hover around 711 points to 720 points this week.

Blue chip stocks closed mixed last week.

Telkom fell Rp 25 to close at Rp 3,975 while Indosat was down Rp 375 to Rp 7,175.

Cigarette manufacturer HM Sampoerna was down Rp 1,075 to close at Rp 8,925 following expectations of lower sales, while competitor Gudang Garam was up Rp 25 at Rp 10,000.

Bank Negara Indonesia lost Rp 100 to close at Rp 1,500 while Bank Internasional Indonesia went down Rp 75 to close at Rp 2,075. (09)