JSX shares expected to remain strong
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are expected to remain strong this week as both foreign and local investors are likely to continue to flock to the market, securities analysts and brokers said.
The analysts said that the success of the general election on May 29 had created a very positive atmosphere in the market.
"The election ran smoothly in almost all parts of the country. This makes foreign investors more confident about Indonesia's political situation," said Morgan Grenfell's research head, Adnan Tan, over the weekend.
He said foreign fund managers now felt more comfortable after the smooth process of election day on Thursday.
Brokers said many investors pulled out of the market in the last two months in fear of possible riots during the campaign period.
"It was something that investors had anticipated," a broker said.
Trading was very active on the JSX on Thursday and Friday with an increased presence of foreign investors. The trading volume reached 378.31 million shares on the regular market on Thursday, with total transactions worth Rp 784.32 billion (US$326.80 million). Friday saw 419.8 million shares changing hands worth Rp 861.8 billion.
"Trading was very strong thanks to the country's successful election," a dealer from Bhakti Investama Securities said.
"Foreign investors started entering the market and they will continue to do so in the coming weeks," said securities analyst, Luciana Budiman, from ING Barings Securities.
Dealers attributed the increase of trading transactions to bargain hunting of several blue chip stocks by foreign investors.
Tan said that most foreign fund managers had flocked to the market because they had found other regional markets not as strong as Jakarta's.
"Foreign investors have started taking their money out of Thailand, Philippine and Malaysia markets," Tan said.
"They brought a lot of money into the Indonesian market," he said.
Tan predicted that the JSX composite index, the local main price index, would likely surpass 700 points in the weeks ahead.
Luciana agreed and said that the market would continue to be strong until the end of this year.
The JSX composite index rose 37.51 points, or 5.7 percent, to close at 696.03 last week against 658.52 in the previous week.
Total average daily volume rose to 283.45 million shares last week in comparison to 187.37 million shares in the previous week.
Total daily average value also increased to Rp 552.09 billion (US$ 230.04 million) last week compared to the previous week's Rp 343.89 billion (US$ 143.29 million).
Telkom was up Rp 400 to Rp 4,100 while Indosat rose Rp 450 to close at Rp 7,250, Cigarette-maker HM Sampoerna jumped Rp 350 to Rp 9,825 while competitor Gudang Garam was up Rp 650 to Rp 10,500. Bank Negara Indonesia edged up Rp 100 to Rp 1,600 while Bank Internasional Indonesia climbed Rp 150 to Rp 2,000.
Tan said the presence of mutual funds in the capital market also contributed to the new high transaction record in the local market last week.
"There is more money seeping its way into the market," he said. (09)