JSX may make rebound despite Aceh problem

By Wachyudi Soeriaatmadja

JAKARTA (JP): The trading outlook on the Jakarta Stock Exchange (JSX) this week will be marked by a slight technical rebound despite the unresolved Aceh problem, analysts said.

They said over the weekend the JSX Composite Index would bounce back early this week after losing five percent during the previous week.

"But the Composite Index could be just a little higher when it closes at the end of next week," Hendra Kustarjo of Panin Sekuritas said on the weekend.

Increasing tension in the referendum-seeking province of Aceh and the U.S. dollar hunt by local banks for their year-end needs would weigh on the market rebound this week, analysts added.

In answer to criticism against the government's lack of attention over Aceh problems, President Abdurrahman Wahid last week promised to hold talks with Acehnese leaders here in Jakarta.

But many speculated Abdurrahman would not meet the Acehnese delegates until after Dec. 4.

The Acehnese will hold a commemoration of the 23rd anniversary of the Free Aceh Movement (GAM) on Dec. 4. This event, as analysts said, would possibly invite an unrest that could upset the stock market.

Analysts were also afraid the dollar hunting toward the end of the year would dampen the rupiah, and thus, the stock market.

"The weakening rupiah, which could also happen as a result of excessive dollar buying, would also be a concern for the market," one analyst said.

Analysts also added the fear of another banking scandal, which could hamper the country's bank restructuring program, should not be underestimated.

A business tabloid reported last week that Bank Negara Indonesia (BNI) did not transfer bad loans worth over Rp 9 trillion to the Indonesian Bank Restructuring Agency (IBRA) as required by its recapitalization agreement with the government. BNI denied the report.

Related to the outlook of JSX this week, Hendra said some local investors had started early in collecting a number of value shares to anticipate the January effect, where the stock market index would usually rise on the flow back of the foreign fund investment following their year-end holidays.

"These foreign funds have equity portfolios around the world and there must be some allocation for Indonesia as well," he said.

He said the long-term expectation of the bullish market early next year could, to some extent, start to reflect as early as this week.

However, for this week particularly, he stressed that the market would be stagnant to higher.

"Most of the foreign funds have closed the books and secured their profits for the year," he said.

But he said JSX had gained a considerably greater reliance on the growing number of local investors recently.

"This is in line with the country's low deposit interest rates," he said.

Hendra also mentioned the noticeably increasing number of companies wanting to issue new shares through the Initial Public Offering (IPO) mechanism at the JSX.

He said a number of companies, willing to base on the end-of- June financial performance, were rushing for IPO in December, before the current year elapse.

"The noticeably increased number of companies going for IPOs will certainly affect the index positively," he said.

Investors could buy IPO shares, close their eyes, wait for just a relatively short while and book a profit as much as five percent, Hendra said.

"The miracle of IPOs in Indonesia is still happening," he said.

On the Aceh issue, he said the market would still be emotional for the time being.

"When the intense situation within currently uneasy Aceh settles and the government offers a satisfactorily greater autonomy for the province, the problem will just be solved there," he said.

On the rupiah, analysts predicted it could easily weaken further to the 7,300 level this week with the increased nervous sentiment over the unresolved problems in Aceh.

Local banks were seen buying U.S. dollars later last week to secure their year-end needs amid the absence of central bank intervention.

A few foreign players were also buying some dollars on Y2K fear.

Analysts said dollar hunting by locals and foreigners could continue to pressure the rupiah this week.

The JSX Composite Index decreased by 5.8 percent to 596.35 points last week from 633.31 points the previous week.

The average daily turnover last week increased to 639.6 million shares, compared to 542.7 million the previous week.

But the average daily transaction value decreased to Rp 461.8 billion last week from Rp 579.1 billion the week before.

Last week's top gainers were PT Multi Bintang Indonesia, rising 72.73 percent, PT Cipendawa Farm Enterprises, which went up 36.84 percent, and PT Lion Mesh, which went up 33.33 percent by the end of the week.

The losers of the week were PT Fiskaragung Perkasa, losing 50 percent, PT Putra Surya Perkasa, which also went down by 50 percent, and PT Centris Multi Persada, which lost 47.54 percent in the week.

The top brokerage firms by transaction value were PT Jardine Fleming Nusantara with Rp 271.1 billion, PT Credit Lyonnais with Rp 199.2 billion and PT Danareksa Sekuritas, which did Rp 197.4 billion in business.

The rupiah went down by three percent to close at 7,205 to the U.S. dollar last week, compared to its close at Rp 6,990 the previous week.