JSX stock trading may keep lethargic

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)