JSX's politically connected stocks down on profit taking

JAKARTA (JP): Speculative buying of politically connected stocks failed to sustain a recent surge in prices on the Jakarta Stock Exchange (JSX) yesterday, with shares losing ground in active trading, brokers said.

"Local investors dominated the market's trading activities," a broker with BZW Niaga Securities said, pointing out that foreign investors were still reluctant to enter the market.

The JSX Composite Index fell 1.6 percent or 8.13 points to 504.00 points yesterday from 512.14 the previous day.

About 626.22 million shares changed hands on the regular market valued at Rp 495.24 billion (US$48.08 million).

The brokers said most politically connected stocks, which became main buying targets over the past two days, fell on a profit taking.

They said automaker Astra International's stocks, in which newly installed Minister of Industry and Trade Mohamad "Bob" Hasan has a significant stake, fell Rp 25 to close at Rp 1,875 with a total trading volume of 13.73 million shares.

Toll road operator Citra Marga Nusaphala Persada (CMNP), controlled by Minister of Social Affairs Siti Hardijanti Rukmana, President Soeharto's eldest daughter, slipped Rp 25 to close at Rp 625 with a total trading volume of 42.21 million shares.

Bimantara Citra, controlled by President Soeharto's second son Bambang Trihatmodjo, fell Rp 75 to Rp 950, with 23.34 million shares changing hands.

The brokers said foreign investors, who have been largely inactive over the past few days, were still waiting for further developments on the government's new measures to resuscitate the country's paralyzed economy.

The head of research at Sigma Batara Securities, Fadjar Limin Sutandi, said trading activity in the local market would be determined by the results of ongoing talks between the International Monetary Fund (IMF) and the government on economic reforms and the plan to peg the rupiah to a foreign currency at a fixed rate.

"Since there has been no clear decision on these two problems, trading activities will remain thin and prices will possibly slip further in the coming weeks," he said.

He said most investors in the local market would continue to make speculative transactions because there were no policy certainties to help create their investment strategies.

As stock prices fell, the rupiah in the currency market remained stable in thin trading yesterday as the market lacked fresh incentives for significant transactions, currency dealers said.

The rupiah closed at 10,300 against the U.S. dollar yesterday, similar to the previous day's close at 10,300, dealers said.

The rupiah was traded in a range of between 10,000 and 10,500 throughout the day.

Currency dealers said an IMF statement issued by visiting officials outlining five discussion topics with the government -- monetary, bank restructuring, budget and subsidy, structural program and private debt restructuring issues -- did not help to lift market sentiment.

"People have yet to see any concrete moves to overcome the country's crisis," a chief dealer with a local private bank said, pointing out that the market was now waiting for the outcome of the ongoing talks. (aly)