JSX stock trading may keep lethargic
JAKARTA (JP): Trading on the Jakarta Stock Exchange (JSX) is expected to stay in a slumber this week as investors continue to take a wait-and-see attitude.
Securities dealers and analysts said most investors were still awaiting implementation of the bold reforms announced by President Soeharto Thursday.
"This will certainly make stock trading less active," said one analyst.
The reforms cover a wide range of business activities, including the end of special privileges for the controversial national car project, fuel subsidies and price controls on several food products.
They also encourage bank mergers, provide deposit insurance to boost confidence in banks and grant the central bank full autonomy. They also scrap Bulog's monopoly on the import and distribution of sugar and wheat.
The securities analysts said the market would have to digest the measures while watching closely how the government implemented them.
"Though all reforms have met the market requirements, the market will have to digest the details of the reforms first," a senior analyst with Bahana Securities said.
"The reforms are aimed for long term purposes so do not expect the market to recover in the near future."
Most analysts welcomed the government's new economic reforms but warned that their impact would not be felt in the short term.
Stock brokers said financial markets were still expecting the government to announce details of the reforms in the banking sectors, especially on the merger issue and central bank autonomy.
"We expect the government to announce that this week and this will boost sentiment in the banking sectors," the Bahana analyst said.
"If there is something positive, we will see a positive reaction from the banking industry to this."
An institutional broker with Trimegah Securities said there was strong interest in banking stock, amid market speculation last week that the government would soon require private banks to merge in an effort to boost efficiency.
"Most banking stock ended higher last week due to positive sentiment on the merge of private bank," the broker said.
Market talks said Indonesia, which at present has about 130 banks (not including rural banks, actually needs only between 20 to 30 healthy and sound banks.
"The merge of private banks should become a positive news for the listed banks though many of them are not in a solid position," head of research of Pentasena Securities Mohammad Syahrial said.
However, head of research at Sigma Batara Fadjar, Limin Sutandi, said the market was still far from its bottom and had yet to consider major concerns on political and social issues resulting from the monetary crisis, which has slashed a large part of corporate earnings.
Million of workers in the property sector and labor-intensive industries have lost their jobs in recent weeks.
"The monetary crisis has forced most industries to have major layoffs which will bring about social problem," he said.
"I personally think that the market will remain low, with the price index to reach as low as 300 in the coming weeks," he said.
In addition, he said, there was likely to be political tension as the convening of the People's Consultative Assembly approached in March to elect the president and vice president.
Stock prices on the JSX rose sharply by around 20 percent last week, with the main price index closing 70.95 points higher at 413.920 points from 342.92 the previous week.
Average turnover increased by around 40 percent to 719.73 million shares changing hands against 463.85 million the week before.
The average value also increased to Rp 797.67 billion (US$99.70 million) last week from Rp 509.42 billion.
Most blue chip stocks rose higher last week. State-run telecommunications firm PT Telkom increased by Rp 1,050 to Rp 3,550, satellite operator Indosat by Rp 5,075 to Rp 13,200, tobacco company H.M. Sampoerna by Rp 1,025 to Rp 4,875, Gudang Garam by Rp 1,675 to Rp 8,475, Bank Internasional Indonesia by Rp 200 to Rp 500, Bank Negara Indonesia by Rp 100 to Rp 550 and Bank Dagang Nasional Indonesia by Rp 25 to Rp 300. (aly)