JSX's share prices to remain sluggish

JSX's share prices to remain sluggish

JAKARTA (JP): Share prices on the Jakarta Stock Exchange are
expected to remain sluggish this week because of uncertainty in
the currency market.

Securities analysts and brokers said over the weekend that
most investors were reluctant to reenter the bourse without fresh
incentives.

Mashil Jaya Securities vice president Tjandra Kartika said "I
think most investors have lost confidence in the market and they
will continue to track sideways until the market recovers".

Morgan Grenfell Asian Indonesia banking analyst Mirza
Adityaswara said the government's decision last week to cut its
budget and to reschedule several large projects was a good move.

"But it is not strong enough to stimulate trading activities,"
he said.

The government announced last week it would postpone projects
worth Rp 42 trillion and review others worth Rp 63 trillion until
the financial crisis hampering the country was over.

Fresh deregulation measures related to the elimination of
market distortions and red tape was extremely important if the
government wanted to improve investors' confidence, Mirza said.

"The reform packages launched by the government so far have
not yet touched the basic needs like reducing monopolistic
practices and distortions in the market," Mirza said.

Mirza said the central bank's moves to lower rates on its
short-term SBI paper over the last two weeks was encouraging.

But commercial banks deposit rates are still offering higher
yields than stocks despite the central bank's rate cuts.

Mirza said he did not think the yields on short-term SBI
papers would return to their early July levels when the rupiah
started sliding.

Tjandra said high lending rates and the high rates on short-
term SBI paper would translate into slower economic growth.

"Theoretically such high lending rates will influence the
whole economy and eventually our GNP will decline," he said.

"More deregulation measures in the real sector are needed to
increase the country's competitiveness or else our economy will
stagnate," Tjandra said.

The JSX composite index closed the week 2.8 percent lower, or
15.55 points down at 531.079.

Average daily turnover fell almost 50 percent with 267.40
million shares changing hand last week compared to 537 million
shares the week before.

Average daily value plunged 60 percent to Rp 325.35 billion
(US$110.28 million) last week from 628.9 billion the week before.

"The market will not rebound in the short term and the trading
activities will probably be thin," a sales director of a joint
venture securities firm said.

"I think one-day trading will mark most of the market
activities in the coming week," he said.

Both Tjandra and Mirza did not expect the composite index to
return to its high 740 for quite some time.

They said the index could fall to less than 500 points.

Most blue chip stocks lost ground last week except Telkom
which was unchanged at Rp 3,350 and Indosat which rose Rp 225 to
Rp 7,725.

Cigarette maker Gudang Garam shed Rp 600 to Rp 8,500, its
rival HM Sampoerna slid Rp 525 to Rp 6,825, Bank Internasional
Indonesia fell Rp 25 to Rp 925, Astra International lost Rp 275
to Rp 3,425, BDNI dropped Rp 75 to Rp 675 and the state-owned BNI
fell eased Rp 75 to Rp 925. (aly)