JSX seen to remain bearish due to lack of incentives
JAKARTA (JP): Trading on the Jakarta Stock Exchange (JSX) is expected to remain bearish this week due to a lack of new buying incentives.
The gloomy outlook in the region's markets, combined with the negative prospect of the rupiah, would continue to cast a shadow in the local market.
Securities analysts said the year-end holiday mood would also add negative sentiments.
The Jakarta bourse will be closed on Dec. 25 and Dec. 26 for Christmas. The market will open again on Dec. 29 and Dec. 30 before taking a two-day break for the New Year on Dec. 31 and Jan. 1.
"The holidays will certainly affect trading activities. There is nothing much we can do in the market this week," a broker said.
The head of research at a joint-venture securities firm said that most foreign investors had left the market for their year- end holiday and that this would likely make the market inactive until the turn of the year.
"I think the market will remain bearish, especially if the government issues no positive incentives during the week," he said.
Fears on the possible increase in the number of local corporate defaults would also affect the market, he said. Such a fear was quite rational because South Korean and Japanese creditors would not likely be able to roll over their loans due to the financial problems in their own countries.
"With Japan and South Korea facing economic crises, the creditors from these countries would face difficulties in rolling over their loans to Indonesian companies," he said.
"This is really bad news, but that's the reality Indonesian companies are facing now," he said.
He said that most foreign investors did not find any positive incentives to enter the local market in the short term due to the negative outlook of Indonesian companies.
Indonesia's foreign debt totaled US$117 billion as of September this year, up 7.3 percent from $109.3 billion recorded in March this year. Private borrowings accounted for $65 billion.
Fadjar Limin Sutandi of Sigma Batara said that foreign investors, who previously controlled about 70 percent of the transactions on the JSX, had already left the market.
He said these investors were expected to enter the stock market again in the second quarter of next year if the country's economy improved.
However, the managing director of Harita Securities, Christina Lim, said trading would be stagnant and the JSX Composite Index would remain below the 400 level for the near future.
"If there is a rise in stock prices, it would be superficial because the general tone for the coming week is bleak," she said.
Most securities analysts and brokers said that political uncertainty in Indonesia remained high despite President Soeharto's appearance Thursday at the military graduation ceremony.
"Most foreign investors are still worried about the lack of transparency about who's going to be the next vice president," she added.
The JSX Composite Index closed 12.94 points higher at 378.79 last week compared to 365.85 points the previous week.
The average daily trading volume rose 30 percent last week to 560.40 million shares changing hands on the regular market from 429.8 million shares during the previous week.
The average daily value rose 32 percent to Rp 578.27 billion last week from Rp 437.51 billion during the previous week.
Cigarette maker Sampoerna rose Rp 150 to Rp 4,150, while competitor Gudang Garam increased by Rp 4,100 to Rp 8,100. Bank Negara Indonesia rose Rp 50 to Rp 525, Bank International Indonesia was unchanged at Rp 350, and Bank Dagang Nasional Indonesia dropped Rp 25 to Rp 325. (aly)