JSX may make gains if government meets IMF demands
JAKARTA (JP): Clear progress in the implementation of lagging areas of the government's economic reform programs will remain a driving factor in stock trading this week, securities analysts said.
However, they believed that reports of progress would only result in a moderate increase in the Composite Index, the benchmark price barometer of the Jakarta Stock Exchange (JSX).
Dandossi Matram from Bakrie Securities said over the weekend there would be some positive news in the coming week, but its impact on the market would be limited.
"The market will be moving upward just a bit next week, while still attached to its stagnant medium term trend."
He said the price index would move between 5 percent and 10 percent this week on positive IMF-related news, and possible developments in Paris Club talks.
The Indonesian government expressed confidence late last week that it could implement all of the unrealized economic programs -- including progress in bank and corporate debt restructuring -- by mid-April.
The government did not meet the March 31 deadline, which led to a delay in the disbursement of the IMF's next scheduled loan of US$400 million.
The government is also set to ask for a rescheduling of its sovereign debts during the upcoming Paris Club talks. The rescheduling would give a complementary push to galvanize the country's moribund economy.
Dandossi said the stagnant trend in the JSX Composite Index was due to the lack of legal certainty in the country, as well as domestic security concerns.
"Foreign investors in general are still reluctant to come here for any investment activities," he said. "It is because they are afraid about whether the local laws can actually protect their investments."
He said that until there were concrete steps in the betterment of the human resources in the country's legal system, the investment climate, including the equity market, would not improve much.
Another analyst said he was also concerned about President Abdurrahman Wahid's trip overseas, warning that conflicts between groups within the Cabinet could grow during the absence of the President.
"The market seems to be watching the impending rumors that there are some moving against each other in the high political echelons," he said.
Abdurrahman started on Saturday a nine-day trip to South Africa, Cuba, Mexico and Hong Kong.
A currency dealer said the rupiah should take advantage of the positive developments by the government in taking care of problems on the IMF-sponsored reform programs.
"The rupiah finally recovered from its previous drop late last week and it is predicted to continue its upward movement next week."
The local currency closed last week at 7,663 compared to 7,620 the previous week. At its lowest point it almost hit 7,800 last week.
He agreed the JSX Composite Index would have its correction upward this week as the rebounding rupiah against the greenback would provide a positive impact on the stock market.
The index dropped 2.1 percent last week to close at 570.81 points, down from 583.27 the previous week. The daily average transaction value decreased to Rp 483.2 billion in the quiet three-day trading week, compared to Rp 670.33 billion the previous week.
The daily average turnover also decreased to 337.3 million shares, from 591.7 million shares the previous week.
Last week's top gainers were PT Lion Mesh, whose shares jumped 67.74 percent, PT Tancho Indonesia (34.21 percent) and PT Alakasa Industrindo (26.67 percent).
The week's big losers were PT Sorini Corporation, whose shares fell by 26.67 percent, PT Toko Gunung Agung (25.81 percent) and PT Mas Murni Indonesia (25 percent).
Top brokerage firms by transaction value were PT Goh Ometraco with Rp 364.98 billion in transactions, PT Vickers Ballas Tamara (Rp 155.78 billion) and PT Merrill Lynch Indonesia (Rp 134.14 billion). (udi)