JSX share prices expected to be mixed this week

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are expected to be mixed this week as fears of a rise in U.S. interest rates linger.

Securities analysts said the outlook would remain poor with stocks just consolidating.

"There will be some bargain hunting on selective stocks, saving the index from a further plunge," one analyst said.

The rupiah is pegged not only to dollar but also to other major foreign currencies. The rise in the U.S. interest rate is, however, more sensitive to the local stock trading rather than the interest hike made by local banks

"Interest rate fears, combined with the poor performance of banking stocks and the impact of the central bank's low lending target will still be the central issues," he said.

DBS Securities Indonesia's research department predicted shares would remain weak on interest hike fears.

The U.S. Federal Reserve's steering committee meets on March 25 to decide whether to raise rates.

"The decision made by the U.S. Fed will have direct implications for the local interest scenario," DBS said.

One Dongsuh Kolibindo Securities analyst said the Indonesian market was not ready to avoid the negative effects of the U.S. interest rate fluctuation.

"The local market is still dominated by foreign investors and we have to accept the reality," he said.

In February, the rise in the U.S. interests rate was higher than expected.

"Analysts expect there will be another 50 basis point increase this month. With such an increase, the equity market will be weak," he said.

In addition to interest rate fears, unfavorable government policy like Bank Indonesia's low lending target would probably continue to dampen buying segment, he said.

He said that many investors were also in a wait and see stance, waiting for financial reports. "This will also affect the market."

The JSX composite index lost 2.5 percent or 19.98 points last week to close at 666.84 against the previous week's closing of 688.04.

Last week share prices rose early in the week but lost ground on heavy selling of banking stocks.

Newspaper reports on the central bank's low lending target caused investors to dump banking stocks fearing the policy would hurt banks' earnings.

State-owned Bank Negara Indonesia lost Rp 125 to Rp 1,375, Bank International Indonesia fell Rp 125 to Rp 1,750, Bank Danamon eased Rp 100 to Rp 2,575, Bank Niaga slipped Rp 200 to Rp 7,200 and Bank Bira dropped Rp 150 to Rp 3,125.

Banks to rise were Bank Pikko which added Rp 325 to Rp 1,200 and Bank Papan Sejahtera which jumped Rp 375 to Rp 1,875.

Among financial stocks Asuransi Dayin Mitra rose Rp 600 to Rp 2,300, Pudjiadi Prestige Limited put on Rp 200 to Rp 925, while Intinusa Selareksa leapt Rp 375 to Rp 1,775.

Most blue chip stocks fell. PT Telkom fell Rp 150 to Rp 3,900, Indosat by Rp 75 to Rp 6,575, HM Sampoerna by Rp 450 to Rp 11,450 and Gudang Garam by Rp 600 to Rp 10,050.

Noodle maker Indofood Sukses Makmur's were snapped on news that tycoon Putera Sampoerna had bought about 5 percent of the company and planned to buy another 10 percent.

But this was bad news for cigarette maker H.M. Sampoerna, which is controlled by Putera. The company's share prices plunged on fears that Putera's plan to own up to 15 percent in Indofood would affect the cigarette company's earnings.

Putera later said the purchase was a personal investment. (09)