JSX expected ro rebound on anticipated good news
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)