JSX may be weaker on wait-and-see mood

JSX may be weaker on wait-and-see mood

JAKARTA (JP): Some analysts predicted a weaker performance on
the Jakarta Stock Exchange (JSX) this week as many investors are
worried about an increase in U.S. interest rates.

"The U.S. stronger employment data in April and May seems to
trigger an increase in interest rates. But we have to wait for
the Federal Reserve's decision," an analyst from PT Peregrine
Sewu told the Jakarta Post.

"Investors don't like uncertainty. Because of investors' fear
on an interest rate hike in the United States, I think the market
should be dependent to the U.S. market," the managing director of
Lippo Securities, Kelvin Lee, said.

"It is, however, positive to see the impact of the new data on
the U.S. market soon, whether it's positive or negative. The
point is that it will reduce uncertainty," Lee added.

The two analysts also viewed that activities on the JSX will
be quiet this week because of a lot of concentration on new
initial public offerings (IPO).

Another analyst said that there might be one IPO, by PT Lippo
Karawachi early this week, while two other offerings will come
later.

The Peregrine analyst, who preferred not to be named, said
that share prices of selected pulp and paper stocks like Indah
Kiat would continue to increase this week, although in a very
narrow range.

"I would also say that investors may leave retail stocks like
Matahari for a while because of the planned IPO of other retail
companies like Pasar Raya and Ramayana," the analyst added.

He said that it is going to happen because Pasar Raya may be
priced at a price earning ratio (PER) of 15 to 20 times, as
compared to the sector's PER level of above 20 times now.

He also said that selected textile and shoe counters, which
just received positive support from a new regulation issued by
the government last week, may see a slight increase this week.

"But I think the impact of the deregulation has been reflected
in the prices of those stocks at this week's close. So, I don't
expect further increase next week," a senior analyst with a
London-based securities company told the Post on Friday.

Rumors

Last week, the JSX saw another very weak performance although
the government issued a positive inflation rate figure and
announced a new trade deregulation package in the middle of the
week.

"There is no dramatic impact on the stock market although the
regulation is positive for export oriented companies," Lee said.

Another analyst viewed that Astra International should have
got strong support from the exemption of luxury tax on vehicles
with local contents of higher than 60 percent.

"But a Presidential decree which allows the Timor car to be
imported was another piece of bad news for Astra," he said.

"Although there was no significant impact, I would say that
investors are concerned more on the decree than the
deregulation," he added.

"But it does not explain the weakness on the JSX this week,"
he said.

Trading on the JSX last week was flavored by rumors on two
different counters -- Perdana Cipta Multi Finance and Super Indah
Makmur.

Several dealers contacted by the Post said that rumors on a
takeover and rights issue were the main reasons for significant
increases in the two counters' share prices.

An analyst with a foreign brokerage firm said "any rumor, in
which Kotjo (businessman Johannes Kotjo) is involved, should be
interesting."

The first rumor was that Kotjo would take over Super Indah, a
plastic maker. It pushed up the company's share price by 136
percent last week to Rp 3,250 (US$1.30).

"It doesn't make any sense to me," a senior trader, Nurkhamid
Akhmad, said.

Nurkhamid said although the stock was suspended for one
session on Tuesday because of a 78 percent price increase on
Monday, the price still went up after the suspension was lifted.

"We are uncertain whether the rumor is going to be true. If it
is true, then why didn't the company say anything about it in its
statement and why did the price manage to go up?" Nurkhamid
asked.

Super Indah was recorded as the top gainer last week and the
second biggest in transaction value and volume, with 30 million
shares traded worth Rp 90 billion.

Another company run by Kotjo, Perdana Cipta Multi Finance, was
recorded as the second top gainer last week, with its price
rising 48 percent to Rp 2,975 at the week's close.

Nurkhamid said a rumor that the company was going to issue
rights shares was the trigger for such a sharp increase.

The company's management has also confirmed in a press
statement that it had planned to issue 100 million rights shares
detachable with 15 million warrants but that it is subject to
shareholders' approval in their planned-meeting on June 31.

JSX share prices declined slightly last week by 0.6 percent
with its composite index closing the week 4 points lower at
612.76.

Transaction volumes, however, remained big with 399 million
shares traded valued at Rp 1.1 trillion.

Foreign buy transactions amounted to Rp 707 billion, against
sell transactions of Rp 743 billion.

The most active stocks in value were JIHD (with total
transaction value of Rp 154 billion), Super Indah (Rp 90
billion), Astra International (Rp 84 billion), Telkom (Rp 69
billion), Perda Cipta Multi Finance (Rp 47 billion), HM Sampoerna
(Rp 42 billion), Lippo Land (Rp 31 billion), Apac (Rp billion),
Indosat (Rp 23 billion) and Gudang Garam (Rp 22 billion). (alo)