Sat, 27 Jul 1996

JSX shares plunge 1.3% on profit taking

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) closed 1.3 percent lower yesterday, bringing the week's total loss to 3.2 percent due, due to foreign selling pressures and profit-taking by local investors on concerns about a possible U.S. interest rate hike and domestic political instability.

The JSX composite index plunged yesterday 7.14 points to 561.31, taking the week's total loss to 19.24 points or 3.2 percent from the week's opening level of 580.07.

"Foreign investors have tried to sell their positions on blue chips to anticipate the possibility of an increase in U.S. interest rates," a dealer with a London-based securities company told The Jakarta Post.

"It's not a new issue but it remains the main reason. The point is they could not liquidate their portfolios at once due to a liquidity problem," the dealer said, adding "the pressures have started early this week."

"The market lost support from foreign investors today and it became worse as local investors had anticipated foreign investors' move of profit taking," another dealer from PT Pentasena Arthasentosa, Sumirat, told the Post.

Sumirat said that foreign investors' moves were also triggered by a belief that Japan might also raise its interest rates.

"It should be noted that American investors have a big portfolio in Japan."

A senior analyst with a European-based brokerage, who asked not to be named, believed that what was happening on the JSX was normal because foreign investors usually take quick action to secure their portfolios on political issues.

The analyst and the two dealers shared the opinion that the JSX is affected not only by such interest rate issues but also by the political issue related to the continuing demonstrations by the supporters of the ousted chairperson of the Indonesian Democratic Party (PDI), Megawati Soekarnoputri.

They, however, gave different views as to whether the PDI demonstrations have a minimal or strong impact on the JSX.

Another political issue is a rumor which emerged yesterday morning about President Soeharto's health.

"I heard the rumor but I don't see that it is the main reason for today's bearish mood," one of the two dealers said.

"But it's not to say that the rumor has had no impact on the market," the dealer added.

The JSX's total trading volume yesterday was 97.8 million shares valued at Rp 237.9 billion.

Declining stocks outnumbered gainers 87 to 25.

"Big caps stocks are the most easily hurt in any case of foreign selling pressures because they are the most liquid stocks," a dealer said.

"But today's selling on big caps were not only done by foreign investors but also by local investors," he added.

Some blue chip stocks which declined yesterday were HM Sampoerna (which dropped by Rp 400 to Rp 23,900), Gudang Garam (by Rp 200 to Rp 9,100), Indosat (by Rp 25 to Rp 7,525), BII (by Rp 200 to Rp 5,700), Tambang Timah (by Rp 150 to Rp 4,050) and Indocement (by Rp 175 to Rp 7,125). (alo)