JSX may make rebound despite Aceh problem

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.