JSX stock prices rise 2 percent, rupiah down

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) rose 1.9 percent yesterday on the back of speculative buying of selective stocks, brokers said.

The brokers said arbitrage trading in big capitalized stocks, such as PT Telkom, PT Indosat and tin mining company PT Tambang Timah, bolstered prices in the local bourses.

"There is no change in the trading pattern as offshore investors continue to keep an upbeat sentiment on these stocks to benefit from the weakening rupiah," one stockbroker with a joint- venture securities firm said.

The broker said foreign brokerage houses such as Merrill Lynch Indonesia, Credit Lyonnais Capital Indonesia, Indosuez WI Carr and SBC Warburg Indonesia made big buying orders for their offshore institutional clients for certain stocks.

Stockbrokers also said local brokerage houses like Bahana Securities, Makindo and Danareksa Sekuritas were also active yesterday in making buying orders for second-line stocks with strong fundamentals.

Edhy Widjoyo, an analyst from Mashill Jaya Securities, said stock prices over the past few weeks were largely determined by the prices of Telkom, Indosat and Tambang Timah.

"These three stocks accounted for about 35 percent of the total market capitalization in the Jakarta bourse," he said.

If prices of these stocks go up, the index strengthens, he said.

Securities analysts said heated political and social tensions, sparked by riots and unrest in several parts of the country over the past several weeks, discouraged big foreign investors.

The JSX Composite Price index rose 9.8 points to close at 505.03 points yesterday with 579.51 million shares worth Rp 553 billion (US$58.16 million) changing hands on the regular market.

As stock prices rose, the rupiah fell against the U.S. dollar in thin trading yesterday on uncertainty over the government's plan to peg the rupiah at a fixed exchange rate against a foreign currency, dealers said.

They said the rupiah, which opened at 9,100/9,300 in the morning session, ended lower at 9,550/9,650 at yesterday's close.

"I think market confidence in the government has faded away after waiting in vain for three weeks on the plan to peg the rupiah at a fixed exchange rate," a head dealer of a joint- venture bank said.

He said Singapore players, who have not been in the market over the past two weeks over fears that Indonesia might adopt the currency board system, reentered the market to make massive dollar purchases in the market yesterday. (aly)