JSX expects further rallies this week

JSX expects further rallies this week

JAKARTA (JP): The Jakarta Stock Exchange (JSX) will remain
firm this week, boosted by an expected stronger performance on
Wall Street and regional markets, dealers said.

"But next week may see another significant drop of Astra's
share prices, as a response to the government's statement on
Friday that only one carmaker, PT Timor Putra, will be exempted
from import tariffs and luxury sales tax for the next three
years," a senior analyst from Lippo Investment told The Jakarta
Post over the weekend.

The analyst disclosed that based on the drop of Astra's
foreign prices which closed at Rp 3,600 (US$1.54) last week, as
compared to Rp 4,850 before the issue of the Presidential
Instruction on the car industry few weeks ago, foreign investors
might have lost Rp 208 billion on the stock.

"And I am sure there will be another drop next week," he
added.

The analyst also questioned the controversial protection
extended by the government to PT Chandra Asri, a company
manufacturing olefin products in Cilegon, West Java.

"Six months ago, the government said that the olefin center
would not be granted tariff protection. But they quietly broke
the promise as if the foreigners had already forgotten about the
promise," he said.

"How can the government expect foreigners to help develop the
capital market if they do not explain what they are going to do?"
he questioned.

He said that six months ago, the publicly-listed PT Tifico,
which is controlled by Japanese investors, threatened to pull out
their investment here if the government gave protection to
Chandra Asri.

"So I am afraid they will really leave the country," he added.

Despite the feeling of uncertainty among foreign investors,
analysts are optimistic that the prices of JSX shares will go up
this week.

Some analysts said that JSX will most likely fluctuate
according to the performance of Wall Street and the regional
markets.

"If the U.S government reduces the Fed rate, it would be very
positive for the Asian markets," an analyst said.

Strong

The analyst said that in the next three months up to May, the
market will perform strongly and the price index may fluctuate
between the current level to the 600 level.

"Therefore, I disagree with the assumption that most shares on
the JSX have been overvalued," he said.

Dandossi Matram from the Jakarta Brokers Club forecasted that
the JSX will see a weakening performance of the second liner and
small caps stocks which dominated the market last week, while
some blue chips will rebound this week.

Last week, the JSX recorded a total trading value of Rp 1.2
trillion with 398.3 million shares of 195 companies changing
hands.

Foreign investors became net buyers with a total buy
transaction of Rp 854.8 billion compared to their total selling
of Rp 823 billion.

The JSX index closed the week eight points higher at 576.79,
after hitting its lowest at 544 points on Monday on panic
selling.

Analysts said that most of big transactions were supported by
rumors.

Three of Lippo Group's stocks were among the actively-traded
shares.

"The 29 percent rise in Lippo Land share prices was boosted by
rumors that the company had sold its property department in
Singapore and will get a new partner from Hong Kong," the
chairman of the Jakarta Brokers Club, Nurkhamid Akhmad, told the
Post.

Lippo Land closed the week at a new high of Rp 3,775 with a
total transaction of 23.1 million shares valued at Rp 79.2
billion.

Lippo Pacific gained Rp 850 or 100 percent increase to close
at Rp 1,700.

The only listed securities company, PT Lippo Securities, whose
foreign partner Swiss Bank Corp. has pulled out, rose 29 percent
to Rp 2,050 following a rumor that another foreign partner might
join the company.

Similar rumors also boosted property company PT Bhuwanatala
Indah Permai, which is now controlled by Bambang Trihatmodjo and
Johanes Kotjo. Its prices increased by 23 percent to Rp 3,450
with 10.8 million shares changing hands at Rp 33.4 billion.

A takeover rumor also bolstered shoemaker PT Super Indah
Mitory, which was up 102 percent to Rp 1,725 at the week close.

Ciputra Development was among the top 10 losers, which closed
the week 7.7 percent lower at Rp 4,500.

An analysis report said that Ciputra may book Rp 90 billion in
net profits for 1995, much below the expected Rp 106 billion
because the Indonesian Capital Market Supervisory Agency did not
allow the company to book the extraordinary profit of its
Surabaya project. (08)