JSX share prices likely to bounce back

JAKARTA (JP): The Jakarta Stock Exchanges (JSX) share prices are likely to bounce back this week as fears on a possible increase in U.S. interest rates subside.

Securities analysts said the U.S.'s February job data issued last week showed little upward pressure on wages, making fears of the rates hike weaken.

"This will have a positive impact on Wall Street. An improvement in the buying sentiment there will also fuel trading activities in the Asian markets, including Indonesia," one analyst said.

However, DBS Securities Indonesia predicted JSX share prices were likely to consolidate in the weeks ahead as fears over the rates hike remain.

The U.S. Federal Reserve is scheduled to have their steering committee meeting on March 25 to decide whether or not to raise rates.

Stock trading activities here are sometime more sensitive to the increase in the interest rate in the U.S. than that made by the local banks, due to the dominance of foreign investors.

The other factor, which could affect the trading activities this week, is the performance of the corporate financial reports, DBS Securities said.

Publicly-listed companies have begun publishing their 1996 balance sheet. Some, including those reported by Indosat and HM Sampoerna have disappointed investors, as profits were less than expected.

"As in other regional markets, JSX share prices will be highly determined by corporate earnings," an analyst said.

The JSX composite index dropped 3.1 percent or 21.56 points last week to 683.83, against the previous Friday's end of 705.37, as a result of negative impact of the less-than-expected corporate earnings.

The daily transaction volume averaged 217.5 million shares last week, down from 248.8 million shares the previous week.

The daily transaction value also saw a drop to Rp 562.39 billion (US$ 236.3 million) last week against Rp 631.4 billion ($265.3 million) the previous week.

Last Friday the JSX composite index was at 683.80, with 174.8 million shares changing hands on a value of Rp 443.6 billion.

DBS Securities said Indofood Sukses Makmur's internal acquisition was considered too expensive and could also discourage investors.

Indofood, from the widely diversified Salim Group, planned to take over 11 companies PT Intiboga Sejahtera, PT Salim Oil Grains, PT Bitung Menado Oil Ltd and PT Argha Giri Perkasa from the same business group to boost its food-related businesses.

The Rp 1.75 trillion acquisition would be very expensive and contribute little growth to the company, the securities company said in its weekly review.

According to the securities company's research division, companies like HM Sampoerna and Asahimas Flat Glass, which recorded a disappointing financial result, would remain unattractive stocks.

"HM sampoerna is predicted to further book financial losses in the coming two years," an analyst from a joint venture securities firm said.

The shares of the country's state-owned Bank Negara Indonesia recorded the highest volume over the week with 84.3 million shares changing hands at a total value of Rp 133.98 billion, with Great River International in the second rank with 62.2 million shares exchanging hands on value of Rp 92.2 billion and Lippo Land Development with 60.3 million shares changing hands on value Rp 392.7 billion.

Lippo Land was the bargain hunting target by investors, after reports of their plan to merge with another property arm of Lippo group.

Lippo Land Development gained Rp 1,125 to close at Rp 6,925 last week, against Rp 5,750 the previous week, Lippo Pacific Finance Rp 850 to close at Rp 3000 last week against Rp 2,150 in the previous week, Bank PDFCI Rp 775 to close at Rp 2,800 last week against Rp 2,025 previous week, Hotel Sahid Rp 300 to Rp 1,700.

"The Lippo Group's shares were among the target last week," one broker from a joint venture brokerage firm said.

Among the blue chips, HM Sampoerna's shares remained unchanged at Rp 11,900, while others fell. State-owned telecommunication firm PT Telkom dropped Rp 125 to close at Rp 1,050, Gudang Garam Rp 25 to Rp 11,650, Indosat 125 to Rp 6,650, Bank BNI Rp 225 to Rp 1,500 and Astra Rp 175 to Rp 6,025. (09)