Jakarta stocks wrap up slightly lower on profit taking

Rendi A. Witular, The Jakarta Post, Jakarta

As investors and traders grieved over the devastation in Aceh and North Sumatra, the Jakarta stock market closed without the usual fanfare and slightly lower due to profit taking.

The Jakarta Composite Index ended on Thursday with a dip of 0.42 percent, or 4.197 points, at 1,000.233 and a volume of 1.13 billion shares valued at Rp 755.99 billion (US$81.22 million).

Dealers attributed the decline mostly to the price of several blue chips overheating amid negative sentiment caused by Sunday's earthquake and tsunami.

The natural disaster has claimed over 50,000 lives in northern Sumatra alone.

"Trading was thin, as most investors are on holiday and there is a concern that reconstruction in Aceh and North Sumatra may reduce funds allotted to business development," said a dealer with BNI Securities.

According to Vice President Jusuf Kalla, the cost of rebuilding infrastructure damaged in the disaster may reach Rp 10 trillion -- about the same as the cost of a 100-kilometer toll road in Greater Jakarta.

Jakarta Stock Exchange (JSX) president director Erry Firmansyah said the Index's closing at the 1,000 level indicated an increase of about 45 percent from the last day of trading in 2003.

The Index recorded its highest level on Wednesday, when it ended at 1,004.43.

"The increase has placed the Jakarta stock market at the top of the region's markets in terms of index movement. We expect the Index to hit another record next year, given an improved business climate," said Erry.

The increase has also driven up Jakarta's market capitalization by 48.3 percent to Rp 683 trillion this year, compared to last year's Rp 460 trillion, with PT Telkom shares still the largest contributor with 17 percent.

Capitalization may be even higher next year, as the market's price earning ratio (PER) remains low at 10.77 times, compared to its regional peers such in Malaysia and Singapore, which enjoy a higher PER at 16 times.

Erry said the low PER would attract more investors to enter the market, as traded shares were inexpensive.

During 2004, a dozen new companies listed shares on the JSX, selling Rp 2.14 trillion in shares to the public.

The number of entries was less than the projected 20 owing to political and security uncertainty caused by the long election year, according to the bourse.

Meanwhile, the JSX also reported that 14 companies were delisted by request or as a penalty for violating capital market regulations.

The bourse projects that 30 companies will list their shares next year, and that 45 listed companies will sell additional shares by issuing rights or bonus shares.

In order to prevent "miscalculations", the JSX has deliberately set a conservative target for daily transactions in 2005 -- an average of Rp 750 billion within 246 trading days, lower than this year's average of Rp 1.03 trillion.

The JSX also said 20 of the 142 securities houses in the country, would have their operating licenses revoked for failing to meet the minimum stored capital requirement of Rp 25 billion by the end of this year, as set by the Capital Market Supervisory Agency.