JSX likely to slow down in 2nd half of this year
JAKARTA (JP): The performance of the Jakarta Stock Exchange (JSX) is likely to slow down in the next six months as investors are uncertain of both economic and political stability.
A number of stock analysts contacted by The Jakarta Post over the weekend viewed that the stock market may lose support from the macroeconomy because of the widening current account deficit and stringent money climate which will not allow any decline in interest rates.
On the technical side, JSX share prices increased by up to 22 percent in the first half this year, with the composite index reaching its highest level of 630 points on April 24, as compared to this year's opening of 513. This means that only very limited potential gains are left for the second half of the year.
On the political situation, the analysts said that the impact on the market of the recent chaos in the Indonesian Democratic Party (PDI) has faded, but foreign investors may reduce their activities later this year because the political situation is likely to be unstable in the preparations for next year's general election.
"I think the market is going to be bearish," an analyst from PT Peregrine Sewu Indonesia told the Post.
The analyst, however, estimated that some stocks may outperform the market. The stocks include those of businesses with cyclical marketing like pulp, paper and plywood, and those of the infrastructure sector.
"I think that in the next few weeks, market activities will slow down as most foreign fund managers are on summer holiday," Lippo Securities' managing director, Kelvin Lee, said.
"The market, however, will strongly perform for a few months after the holiday before it slows again at the year-end because of political reasons," Lee told the Post.
Lee also estimated that the JSX Composite Index is likely to close the year at a level above 600.
Commenting the macroeconomic stability, the president of PT Inter Pacific Securities, L.G. Rompas, said in a long-term point of view, the macroeconomy situation is positive.
"It's true that most banks might not record high growth because the central bank has set the ceiling of credit growth for each bank," Rompas said.
"Currently, banks report an over-equity situation. This situation may force banks to maintain or even lower their interest rates," he told the Post.
This situation, according to Rompas, is supportive for the business of finance, particularly for infrastructure companies.
"Infrastructure-related companies which need long-term financing like the state electricity company PLN, the state-owned Bank Tabungan Negara, toll road manager PT Jasa Marga or toll road developer PT Citra Marga can take advantage of this over- equity situation," he noted.
"Therefore, in a long-term viewpoint, I would say that this situation is positive because with better infrastructure, our economy will get a boost," Rompas added.
Go public
Early this year, the JSX projected that about 30 new companies will go public this year, including three state-own companies.
It seems that the target is out of reach. Currently, less than 10 initial public offerings (IPO) have been approved by the Capital Market Supervisory Agency.
An informed source from the JSX said there might be only one state-owned company to go public, instead of three as declared by Finance Minister Mar'ie Muhammad early this year.
There is also a rumor that the public offering of PT Pasar Raya, a retail subsidiary of ALatieF Corporation, might be canceled.
Analysts, however, still believe that those offerings will help boost the market, no matter whether the JSX's target is met or not.
"It's worth noting that investors are now getting mature. It means that the success of any IPO is now determined by market forces," Rompas said.
"And I hope that any state-owned company to go public will also report a success based on market forces and not by government intervention in its capacity as controlling shareholder," he said.
Commenting on this week outlook, the analyst from Peregrine said that share prices might be stagnant on selective buying, following a rebound on blue chips last week.
JSX share prices went up by 3.7 percent last week with its composite index rising 21.41 points to close at 594.26 points as foreign investors were back on blue chips which were slightly corrected in the previous weeks.
The big caps stocks rebounding last week were Gudang Garam which closed at Rp 9,975 (as compared to the previous week's close of Rp 9,150), Indosat at Rp 7,825 (Rp 7,425), Indocement at Rp 8,000 (Rp 7,575), Indah Kiat Pulp & Paper at Rp 2,275 (Rp 2,175), Sampoerna at Rp 26,500 (Rp 26,175) and Telkom at Rp 3,525 (Rp 3,300).
The JSX recorded a total transaction of 638 million shares worth Rp 1.9 trillion last week, as compared to the previous week's 393 million shares worth Rp 989 billion.
The JSX also got a new listing of PT Lippo Karawaci last week.
Lee said the success of the listing of PT Lippo Karawaci, a real estate company of the Lippo Group, as the first initial public offering listed on the JSX this year, has helped the market regain investors' confidence.
In one trading day, Lippo Karawaci recorded total transactions of 145 million shares valued at Rp 477 billion. Its share price closed at Rp 3,500, as compared to its public offering price of Rp 3,250.
"I think some new IPOs will also strongly perform on the secondary market, including PT Citatah which is scheduled to be listed on the JSX this week." (alo)