JSX still looks for new direction: Analysts

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)