Local financial market gains ground as stocks rise 1.1%
Local financial market gains ground as stocks rise 1.1%
JAKARTA (JP): The country's financial market gained footing on
Friday with the rupiah moving to 9,025 against the U.S. dollar as
stock prices rose by 1.1 percent.
Currency dealers said signs of improvement on the country's
political and economic fronts have offered more leeway for the
rupiah to gain ground against the American dollar.
Dealers said that the rupiah, which opened lower at
9,200/9,300, managed to break through the 9,000 level to hit an
intraday high at 8,800 as offshore operators continued to unload
their holdings after learning that the country's House of
Representatives had passed the much-debated new political bills
into laws.
"Some attributed the rupiah's strong gain to positive news on
political conditions, but I think it was because certain offshore
players were afraid of the imposition of a capital control
system," a chief dealer with a joint venture bank said.
The dealer added that rumors circulating in the market on
Friday said Indonesia was considering to opt for an adjusted
Malaysian-style capital control system.
Those rumors forced many offshore operators, who had
speculated on the rupiah in the past few weeks, to frantically
sell their dollars, the dealer said. Nevertheless, he added, most
local operators did not believe the rumors.
Currency dealers said that dollar selling by certain state
banks also helped the rupiah to strengthen against the American
dollar though its fate in the medium and long term remains dark.
"Several state banks sold their dollars at the 8,900 level,"
the dealer said pointing out that such dollar-unloading brought
the rupiah to an intraday high of 8,800.
However, the rupiah was slightly weaker at 9,050 against the
American dollar at the end of trading, though firmer compared to
its close at 9,225 the previous day.
Dealers and financial analysts said that sentiment on the
rupiah remained bearish in the medium and long term with trading
range expected to be between 9,000 and 9,500 against the dollar.
Taking the lead of the rupiah, share prices in the local stock
market also rose 1.1 percent on Friday with the Jakarta Stock
Exchange (JSX) Composite Index ascending 4.66 points to close at
411.93.
Trading volume reached 288.19 million shares changing hands,
valued at Rp 271.69 billion.
Gainers led loses 48 to 38 with 83 stocks remaining unchanged.
Despite the rise in the main price index, the biggest-cap
stock, state-owned local telecommunications giant PT Telkom,
inching down Rp 25 to close at Rp 3,300 on 10.6 million shares
traded.
State-owned international call operator PT Indosat, meanwhile,
gained Rp 775 to reach Rp 11,150 with 2.9 million shares traded.
Ciggarette maker PT Gudang Garam was unchanged at Rp 10,800 on
three million shares, while competitor PT HM Sampoerna rose Rp
300 to Rp 5,700 on 15.5 million shares.
Stockbrokers said local share prices were boosted by bullish
sentiment in the regional equity markets.
"There were some buying programs by investors to benefit from
the rise in regional markets," Vonny Juwono, an institutional
sales broker with Trimegah Securindolestari, said.
Stock analysts said that the dire political and economic
situation at home has forced most investors into speculative
trading rather than pure investment tactics.
The head of research at Panin Sekuritas, Anton Karlam, said
that economic and political reform plans have not sufficiently
assured foreign investors to be comfortable in the local stock
market.
"Investors do not find any meaningful guide to invest here,"
he said. (aly)