JSX still looks for new direction: Analysts
JAKARTA (JP): Several analysts have predicted that the Jakarta Stock Exchange (JSX) is still looking for new direction this week, while an academician noted that the capital market would not gain fundamental support this year as a result of the country's tight money condition.
"I would say that investors will try to take profits just to make sure that they have fresh money in hand to anticipate several new initial public offerings (IPO)," research director of PT Sigma Batara, Fadjar L. Sutardi, told The Jakarta Post on Friday.
"The market is likely to remain quiet next week. But within two weeks, it will get a boost from two or three IPOs," Lippo Securities' managing director, Kelvin Lee, said.
Another analyst, who preferred anonymity, said that there is a strong indication that foreign investors will show an interest in some of the planned IPOs despite the relatively small size of the offerings.
Fadjar said that as far as different sectors are concerned, infrastructure-related companies and consumer goods firms will continue to perform well.
"Other companies, which already have regional or international competitive edges, like glass manufacturers and ceramics producers, will also get a positive sentiment from long-term oriented investors."
"It's worth noting that investors also evaluate companies on the basis of their regional or international competitiveness to enter the forthcoming free trade era," Fadjar added.
Lee told the Post over the weekend that the stock market should get positive support from Bank Indonesia's plan to issue bonds in the United States.
"The bond issue will give a benchmark for private companies. And we must not forget that our stock market also sells bonds. So I think it's very helpful for the growth of our stock market," Lee added.
He said that despite the stagnant performance in the last four weeks, the capital market feels that investors' sentiment is still positive.
"As I said before, as long as the transaction volume is concerned, the market is still strong," another analyst said.
The JSX composite index has increased by 104 points, or 20 percent, in 1996 from this year's opening level of 513.8 points to 617.4 at the end of May.
In the first five months alone, the JSX recorded total trading values of approximately Rp 27 trillion (US$11.4 billion), a level equivalent to 84 percent of 1995's total trading values.
"It's also a positive sign that the impact of the government's controversial "Timor car" policy is very minimal now," the analyst added.
Under the policy, the government is giving significant tax breaks to PT Timor Putra Nasional to produce a "national car", to be called Timor.
A senior University of Indonesia lecturer, Dorodjatun Kuntjoro-jakti, however, noted that the stock market will not get fundamental support from the Indonesian macro-economy this year.
He said that as the government wants to cool down the economy through a tight money policy, portfolio investments should become less attractive.
"No wonder, the JSX has yet to see new initial public offerings this year," Dorodjatun told a meeting attended by more than 200 executives of the JSX, the Surabaya Stock Exchange and securities companies on Friday.
Besides Dorodjatun, the meeting also presented the chairman of the Capital Market Supervisory Agency (Bapepam), I Putu Gede Ary Suta, as a speaker.
Dorodjatu said that there has been a large amount of fund inflows but only a very limited part of those funds went to the stock market.
"I think foreign investors are trying to take advantage of our high interest rates," he added.
Anticipation
Share prices on the JSX decreased by 0.1 percent last week, as compared to the 0.6 percent decline in the previous week, with the composite index closing at 617.46 last Friday.
Several analysts contacted by the Post shared the opinion that the market was very quiet as investors were preparing for the forthcoming IPOs.
"Some domestic retails still tried to speculate on certain stocks while most foreign investors stayed on the side lines," a dealer said.
An analyst said that within two weeks, there might be three public offerings, including London Sumatra (a plantation firm), Lippo Karawachi (a property company) and Citatah (a marble producer).
"I think those companies will get Bapapem's approval next week. They should have got it this week but Bapepam was too busy with the Bank Mashill case," according to an analyst who asked not to be named.
The JSX recorded total transactions of 367 million shares worth Rp 1.1 trillion last week. Foreign buy transactions reached Rp 773 billion against sell transactions of Rp 665 billion.
A paper giant, Inti Indorayon Utama, was among the top losers last week. Its share price plunged 11 percent to Rp 2,100 from Rp 2,375 because of disappointing first quarter results.
The largest producer of purified terephthalic acid (PTA), Polysindo Eka Perkasa, also saw a 29 percent drop in its share prices to Rp 1,275 last week.
One of the top gainers last week was Great River Industries, which closed the week 10 percent higher at Rp 2,600, with 55 million shares traded.
Great River announced that it booked net sale revenues of Rp 52 billion in the first quarter of this year, indicating a 25 percent increase over the same period of last year, while its net profits rose 63 percent.
Great River said in a statement obtained by the Post over the weekend that it will also split its stocks today by halving the nominal value to Rp 500. The stock-split will increase its total shares to 338 million shares.
The most active stocks in value last week were Gudang Garam (with a total transaction value of Rp 101 billion), followed by HM Sampoerna (Rp 92 billion), Telkom (Rp 79 billion), Great River Industries (Rp 55 billion), Lippo Life (Rp 44 billion), Indosat (Rp 44 billion), and Astra (Rp 33 billion). (alo)