JSX expected ro rebound on anticipated good news

JAKARTA (JP): Equity analysts expect rebounds on the Jakarta Stock Exchange (JSX) this week as negative sentiments fade away on some anticipated good news.

They said the JSX Composite Index, which strengthened last week following gains in big caps and certain other stocks, would likely continue moving upwards over pleasant economic issues, including the expected move by rating agency Standard & Poor's (S&P) to upgrade Indonesia's credit rating.

Lin Che Wei, head of research at PT SG Securities Indonesia, said there would be more buying this week.

"There are many things that can propel the market up next week, even though overall market sentiments are currently negative." Che Wei said over the weekend.

He said investors would shrug off the still unclear local political development.

The expected move by S&P to upgrade Indonesia's sovereign long-term foreign currency debt rating would become a lead for improved market sentiment this week.

"S&P is now checking through all the necessary documents before they upgrade Indonesia's rating," he said.

Another positive lead for the market, Che Wei said, was the talks on the possible return of the money owned by former President Soeharto, which is parked overseas.

President Abdurrahman Wahid hinted last week that Soeharto would comply with demands to return his family's wealth to the state, in return for the government's promise that he would be pardoned.

Analysts said billions of U.S. dollars in cash could be promptly brought into the country, thus quickly supporting the value of the rupiah, if the former strongman wanted to cooperate with the government.

The strengthened rupiah means a more attractive JSX, according to them.

"The return of Soeharto's wealth would skyrocket the rupiah value against the dollar, yet, it is still doubtful if the government can make that happen," Che Wei said.

Soeharto is currently under investigation over the wealth he allegedly amassed during his 32-year rule.

Still, other analysts feared political maneuvers would likely take place ahead of Wahid's accountability speech before members of the People's Consultative Assembly in August.

"There may be serious efforts by certain parties to unseat president Wahid, and the time could begin now," an analyst said over the weekend.

He added there could be political maneuverings to undermine the President with street demonstrations against his performance.

Wahid's administration has been widely criticized for dragging its feet in its efforts to improve the economy.

Some also claimed president Wahid and his economic team had not paid enough attention to economic issues, spending too much time politicking.

An analyst for a joint venture securities firm said the possible U.S. interest rate hike should also be taken into consideration.

"The JSX may respond negatively if the U.S. interest rate is raised. It will disturb the fragile rupiah, which in turn weighs on local stocks," the analyst said.

He said it was still uncertain whether the U.S. monetary authorities will raise the interest rate given the country's already weakening economic data.

Last week some large cap stocks drove the JSX Composite Index up.

Shares of state telecommunication firm PT Telkom rose on rumors that it would acquire interests of state owned international call operator PT Indosat.

Cigarette maker Gudang Garam also rose on the prospect of the company ending its internal management problems.

Lippo Group shares also were actively traded late last week, but analysts failed to explain the reasons behind those purchases.

The JSX Composite Index ended up 1.3 percent last week at 484.02 points, from 477.92 points the previous week. (udi)