Jakarta stocks hit all-time high

Jakarta stocks hit all-time high

Rendi A. Witular, The Jakarta Post, Jakarta

The Jakarta Composite Index skyrocketed on Monday to the highest
level in the nation's history, as new investors from the United
States and Europe entered the market seeking to capitalize on the
rising optimism.

The Index moved full-throttle ahead and ended up by 22.877
points, or 3.1 percent, at 753.692, the highest since the
benchmark index began in 1982. It also recorded an all-time high
in volume of Rp 1.99 trillion (US$227 million).

Previously, the highest level ever recorded by the bourse was
742.983 on July 9, 1997, one month before the financial crisis
hit the region.

As always, shares in state-owned telecommunications company PT
Telekomunikasi Indonesia (Telkom) led the Index higher after its
American Depository Receipts in the New York Stock Exchange
surged by 4.7 percent to $18.45.

Telkom shares, the largest counter on the Jakarta Stock
Exchange, ended up by Rp 200 to Rp 7,700.

Cigarette producer Gudang Garam, the second largest counter,
also rose by Rp 500 to Rp 14,700 after the government told
cigarette producers to increase their output amid an absence in
the increase of excise rates this year.

Ferry Yosia Hartoyo, the head of research for PT DBS Vickers
Securities Indonesia, said that the surge was mainly fueled by an
inflow of capital from new investors in the United States and
Europe, taking advantage of the growing market capitalization.

He said that usually only Asian investors were interested in
the country's stock market.

"The U.S. and European investors entered Indonesia because
they see that now the stock market capitalization is growing to a
figure that meets their requirement. Large market capitalization
will enable them to rake in higher profits," said Ferry.

However, he said that the investors were still limiting their
investment as they were waiting for the development in the
country's general election and in the government's efforts to
finance the state budget deficit, which is estimated to reach Rp
24.4 trillion this year.

If the country could pass all of the obstacles, the Index was
estimated to climb higher to even 800, he said.

Elsewhere, Mirza Adityaswara, a stock analyst with PT Bahana
Securities, said that 80 percent of the money which entered the
stock market on Friday was from foreign investors, making the
bourse overly sensitive to negative news, locally or globally.

"With such a huge amount from foreign investors, our stock
market remains sensitive to foreign investor sentiment, unlike
Thailand which only has 30 percent of foreign funds in its stock
market," said Mirza.

Aside from the influx of foreign funds, the surge in the Index
was also caused by the optimism that pervaded stock markets
worldwide, Mirza said.

Japan's Nikkei Index ended up 1.2 percent to 10,965, while the
U.S. Dow Jones industrial average rose by 63.41 points on
Thursday, or 0.60 percent, to 10,592.44, its highest finish since
March 2002.

Mirza was optimistic that despite a possible correction during
the general election, the index would remain firm throughout the
year because the country's macroeconomic situation was now
relatively "controllable".

Despite its limited direct impact on the country's overall
economy, the rally of the index should be a measure to gauge
investor confidence in the country's economy.

As for companies, the stable and high index figure can be an
effective source of funding and working capital, because the
stock market increase the value if companies.

Elsewhere, thanks to capital inflows from foreign investors
into the stock market, the Indonesian rupiah ended the day higher
at Rp 8,340 against the U.S. dollar. The rupiah ended at Rp 8,345
on Thursday.

10 largest brokers on Friday
(in terms of net value)

Broker Value

1. CLSA Indonesia Rp 197.6 billion
2. ING Securities Indonesia Rp 77.8 billion
3. ABN Amro Asia Securities Rp 76.8 billion
4. BNP Paribas Peregrine Rp 73.4 billion
5. DBS Vickers Securities Rp 61.9 billion
6. Bhakti Capital Indonesia Rp 50.8 billion
7. JP Morgan Securities Rp 36.9 billion
8. Semesta Indovest Rp 14.3 billion
9. Makindo Securities Rp 12.2 billion
10. GK Goh Indonesia Rp 12.2 billion

Source: Bloomberg