JSX rallies for sixth day, off to fresh highs

Rendi A. Witular, The Jakarta Post, Jakarta

The Jakarta Composite Index (JSX) ended higher for the sixth consecutive day on Monday, with foreign investors remaining confident over the country's macroeconomic condition while pouring more money into the bourse.

The index rose by 0.8 percent, or 4.734 points, to 587.057, the highest close since March 29, 2000. However, the value of shares traded declined to Rp 871.8 billion (US$103 billion) from Rp 1.3 trillion on Friday.

"There is still huge confidence among foreign investors, especially over the country's improving macroeconomic indicators such as lower interest rates and relatively low inflation," said Hendra Bujang from Mega Akses Securities.

The benchmark rate on central bank one-month SBI promissory note dropped to a record low of 8.83 percent last week and the annual inflation rate stood at 6.38 percent in August, the lowest in two decades.

Hendra said that currently, foreign investors held 80 percent of shares circulating in the bourse, compared with 60 percent in July.

Foreign-affiliated broker firms such as DBS Vickers Securities, CLSA (Credit Lyonnais Securities Asia) Indonesia and Kim Eng Securities helped the Index bounce back from its lowest point of the day at 574 in mid-session trading.

DBS Vickers, for example, bought around 4.67 million shares of blue-chip, state-owned telecommunications company PT Telekomunikasi Indonesia (Telkom), worth Rp 25.11 billion, which helped the unit to end on a record high of Rp 5,400, up Rp 100.

Kim Eng was also seen buying 3.4 million shares in blue-chip cigarette producer PT HM Sampoerna, worth about Rp 15 billion. Sampoerna shares ended Rp 125 higher at Rp 4,475.

Hendra said that local investors, which currently owned only about 20 percent of shares traded, were reluctant to buy blue- chip shares because they considered their price too high and the price risk depreciating significantly.

He explained that local investors were now hunting for second- and third-liners, such as shares in tire company PT Gadjah Tunggal, heavy equipment company PT United Tractors and spare parts producer PT Astra Otoparts.

"Foreign investors have brought confidence to local investors, encouraging them to buy second- and third-line shares, which are usually inactive. If there are no security problems ahead, I expect the index to reach 600 soon," he said.

The hectic buying started on Sept. 3, when trading value jumped to Rp 1.3 trillion from the normal daily range of Rp 300 billion to Rp 400 billion.

This means that the index has jumped 46 percent in dollar terms since the start of the year.

Eyebox

Ten largest net buyers of shares in Monday's trading

Broker Net value

1. DBS Vickers Securities Rp 111.64 billion 2. CLSA Indonesia Rp 21.42 billion 3. Kim Eng Securities Rp 18.56 billion 4. Lautandhana Securindo Rp 12.56 billion 5. Merrill Lynch Indonesia Rp 10.87 billion 6. Mahakarya Artha Securities Rp 8.53 billion 7. ING Securities Indonesia Rp 8.37 billion 8. ABN Amro Asia Securities Rp 5.87 billion 9. JP Morgan Securities Rp 5.19 billion 10. Quantum Qapita Sekuritas Rp 4.50 billion

Source: Bloomberg