JSX share prices surge on improved foreign sentiment

JAKARTA (JP): Shares on the Jakarta Stock Exchange (JSX) soared again on Tuesday on the continued influx of foreign funds and improving confidence in the recovery of the country's beleaguered economy.

The Jakarta Composite Index -- the main gauge of local stock prices -- rose 4.75 percent, or 24.88 points, to close at 548.24 -- a 15-month high.

The index rose 5.7 percent on Monday.

Stockbrokers and analysts are optimistic that the index will continue its upward movement until mid May.

An institutional sales broker at Trimegah Securindolestari, Vonny Juwono, said the rally on the JSX could be partly attributed to the brighter prospects of the corporate debt restructuring driven by rupiah appreciation against the greenback and lower interest rates.

"The JSX should look firmer, with its listed companies having an easier time completing their restructuring process with creditors," Vonny said.

Some big listed firms have proceeded with their massive debt restructuring plans. They include auto giant PT Astra International, conglomerate PT Bakrie & Brothers and state owned PT Danareksa.

Vonny also added that a cheaper dollar meant a lighter burden for companies listed on the JSX to service their foreign currency debts.

Bahana Securities associate director and head of institutional equity sales, Andre Cita, added that foreign investors brought in new funds because they had seen better indicators of recovery in the Indonesia economy.

The fact that the country's political situation prior to the June 7 elections has not deteriorated further as previously expected has helped boost investors' confidence, Cita said.

In addition, he said, investors are also motivated by the moderating inflation rate, the downward movement of interest rates and the improving gross domestic product.

"A number of foreign investors, however, missed the rally," he said.

He predicted that the main price index would continue to rise and test the 600 point level in the short term.

When the influx of foreign funds continued, Cita said, it then pushed the rupiah toward the government-targeted level of Rp 7,500 against the U.S. dollar.

A strong rupiah gives confidence to investors in Indonesia's economy, which in turn positively induces the stock market.

Meanwhile, a foreign exchange dealer at a local private bank said the rupiah opened strong, below the 8,000 level against the dollar, but then weakened in the afternoon to close at Rp 8,085.

"I would guess the rupiah's weakening was due to profit-taking by investors who had bought rupiah at Rp 8,400 per dollar," he said.

On the JSX, banking stocks were mostly higher, led by Bank Bali which gained Rp 275 to close at Rp 875 on 52 million shares traded.

Bank Bali was suspended at midday after rising 46 percent.

The Indonesian government approved the U.K-based Standard Chartered Bank PLC last month to purchase shares of Bank Bali by injecting US$56 million to help in the bank's recapitalization.

Most large-cap stocks also booked big gains, with heavyweight state domestic telecommunications firm PT Telkom rising Rp 200 to close at Rp 3,900.

Astra International jumped Rp 575 or 26 percent to close at Rp 2,150 and International call operator PT Indosat rose Rp 1,050 to close at Rp 17,150. (udi)