Lack of positive leads casts shadow over stocks, rupiah
Urip Hudiono, The Jakarta Post, Jakarta
A lack of positive leads is expected to sustain the local market's recent bearish mood, with a fair chance for further dips on profit taking, an analyst said.
Unsatisfying first quarter turnover at several bellwether companies, coupled with the recent weakening of regional bourses, will likely drag down share prices across the board, market analyst Adrian Rusmana of BNI Securities said on Saturday.
"The rupiah, meanwhile, will remain weak against the U.S. dollar as well," he said.
The Jakarta Stock Exchange Composite Index ended at 1,059.27 last Friday, down 4.55 points from the previous trading day. For the week, the index fell nine points, or 0.84 percent, from the previous week's closing of 1,080.20.
The rupiah, meanwhile, stayed relatively flat last week, ending at Rp 9,486 to the dollar on Friday from Rp 9,470 the previous day, and Rp 9,480 at the beginning of the week.
Adrian said investors should be on the lookout for any activities concerning their blue-chip stocks, as many major market movers in the telecommunications, banking and mining sectors were likely to be affected by inflation, which is still above 8 percent for the year.
"Stocks in the mining sector, I think, will experience particularly active trading over the week," he said.
State-owned telecommunications firm PT Telkom led last week's market decline, as investors engaged in a round of profit taking on the stock. Bank shares were mixed amid the recent probe of a lending scandal at Bank Mandiri.
Adrian said the banking sector was at risk of a slowdown because banks' profits from lending interest margins would decline if the central bank continued to raise its benchmark interest rate to stem inflation and keep the rupiah in check.
A recent Bloomberg survey of nine economists indicated that Indonesia's economic growth had probably slowed to 5.4 percent during the first quarter, down from 6.7 percent during the final quarter of last year, as inflation stemmed consumption.
With such conditions in place, Adrian is forecasting that share prices will move within a range of some 10 points this week, "with a stronger tendency to decline" than climb.
Bank International Indonesia chief economist Ferry Latuhihin agreed with Adrian, saying that the market would remain "sluggish" over the week as he still saw "no signs of any positive sentiments in the near future".
Ferry is forecasting the rupiah will remain under pressure against a recently strengthening greenback.
"With that, I think a level of between Rp 9,490 and Rp 9,500 per dollar would be fair enough for the rupiah," he said.
Other analysts say the market could experience a rebound in bank shares if Bank Mandiri's shareholders meeting on Monday ends with positive results. Many observers expect a major shake-up of the bank's top executives.