JSX likely to see another downward slide this week

JSX likely to see another downward slide this week

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
are expected to drop again this week following a nearly 7 percent
decline last week.

Securities analysts estimated that the gloomy outlook on
regional markets, coupled with investors' concerns over court
challenges by two liquidated banks whose owners are related to
President Soeharto, would affect trading activities.

Other analysts believed that such factors were only part of
the reason for the persistent drop in share prices in the
domestic market.

They acknowledged the regional impact and worries over the
wane of the government's credibility had worsened market
sentiment.

"But they are not the main factor," one analyst said. "I think
the core problem of the market now is the absence of foreign
investors," he added.

Many experts earlier said they believed that the government's
success in securing a multilateral aid package of up to US$40
billion from the International Monetary Fund (IMF) and several
other donor countries would restore confidence.

"The response from the local stock market to the bailout
package is, however, not as good as expected due to the lack of
foreign presence," he said.

Socgen Crosby Securities' head of research, Goei Siauw Hong,
said the IMF bailout package would only have a long-term impact
on Indonesia's economy.

"What the IMF wants from Indonesia is to tighten its belt," he
said last week.

Most analysts said the IMF bailout package, which for a while
did help restore market confidence to shore up the rupiah, had
not been able to enliven the market sentiment.

They said that without the strong presence of foreign
investors, the market would remain weak because the capacity of
local investors was too small to boost trading activities.

"Domestic investors are mostly short-oriented. There is
nothing much they can do," Tjandra Kartika, vice president of
Mashil Jaya Securities, said.

Other analysts believed foreign investors would wait and see
until after the general session of the People's General Assembly.

Results of the session, which will be held in March to elect a
president and vice president and to approve new State Policy
Guidelines, will determine whether foreign investors will return
or not, they said.

Goei Siauw Hong said it would take time before more foreign
investors were seen entering the local market because even in
micro aspects, such as an expected sharp decline in corporate
earnings, the condition was not so promising.

"The new listing of some companies cannot help raise market
sentiment as the overall markets are in a downward trend," he
said.

He predicted the main price index in JSX would decline further
in the coming weeks on a lack of trading direction.

"The stock market has not reached its bottoming-out level. The
index will come to this level in the coming weeks," he said.

Stock brokers said that trading activities in JSX were
sluggish last week in the face of a lawsuit filed against the
finance minister and the central bank governor by the owners of
liquidated banks.

Bank Andromeda, in which President Soeharto's second son
Bambang Trihatmodjo has a 25 percent stake, filed a suit
Wednesday following its closure, and Probosutedjo, half-brother
of the President, followed suit Friday for the liquidation of
Bank Jakarta.

Minister/State Secretary Moerdiono said last week that the
government would stand behind the banks' liquidations, adding
that aggrieved parties could seek redress in the courts as
allowed by law.

The government closed down 16 banks as part of the
government's drive to restore the financial sector last week in
response to the bailout package arranged by IMF.

The JSX composite index fell 34.30 points over the week to
close at 466.116 last week from 500.42 the previous week.

Total average daily turnover was 376.6 million shares last
week compared to 476.60 million shares changing hands the
previous week.

Total average daily value was Rp 466.37 billion (US$ 143.5
million) against Rp 541.21 billion the previous week.

Most blue chip stocks, especially banking stocks, ended lower
last week with Bank Internasional Indonesia sliding Rp 25 to Rp
750, Bank Negara Indonesia by Rp 25 to Rp 750 and Bank Dagang
Nasional Indonesia by Rp 25 to Rp 475, cigarette maker Gudang
Garam by Rp 550 to Rp 9,650 while competitor Sampoerna by Rp 625
rupiah to Rp 5,650. (aly)