Local markets continue to gain in strength

Local markets continue to gain in strength

JAKARTA (JP): The Indonesian financial market yesterday sealed
the week's gaining streak with the rupiah strengthening to 14,550
against the U.S. dollar and the stock market inching up 0.9
percent yesterday.

Analysts attributed the week-long rally to improving
sentiment, both at the local and regional levels, as foreign
investors started selecting quality investments in the region.

A currency dealer with a local foreign exchange bank said the
rupiah strengthened to 14,375 against the U.S. dollar in early
afternoon trading before settling at 14,500/600 at the close.

The rupiah started the week at 14,800 against the greenback.

"It's pretty much following the regional movement, especially
the Japanese yen. Besides, domestically the overall situation is
quite stable unless you look at Irian Jaya and East Timor," the
dealer said.

Reports said at least one person was killed and two were
injured during a clash between rioters and security forces in
Irian Jaya on Thursday, while the situation was still tense in
East Timor following the shooting of an East Timorese man by
military agents Monday during a visit by European Union
ambassadors.

Overall market sentiment, however, was quite positive
yesterday following news reports that the World Bank approved a
US$1 billion structural adjustment loan to Indonesia, currency
dealers said.

The $1 billion loan is part of a $43 billion rescue package
arranged by the International Monetary Fund (IMF) for Indonesia.

World Bank Indonesia country director Dennis de Tray said the
IMF and the Group of Seven industrial countries would soon
announce additional new loans of $6 billion on top of the
existing package.

"That news should give a further boost to the rupiah. We
expect the currency to continue booking gains next week provided
political stability prevails," the dealer said.

Bank Indonesia Governor Sjahril Sabirin said earlier this week
that political bickering was behind the continuing fall of the
rupiah against the U.S. dollar and called on politicians to
refrain from making comments or moves which could undermine the
currency.

Share prices on the Jakarta Stock Exchange (JSX) also managed
to book slight gains yesterday, with the JSX Composite Index
closing 4.172 points higher at 470.545.

The market main index was still at 431.231 Monday.

Yesterday's trading turnover totaled Rp 368.1 million shares
valued at Rp 352.49 billion (US$24.3 million).

For most of the day, however, shares traded lower as investors
cashed in profits after a four-day rally of solid gains,
stockbrokers said.

Bahana Securities associate director and head of equity sales
Andre Cita said economic news was predominantly positive this
week, such as an improving trade surplus and the resumption of
international loans to Indonesia.

There had not been too many demonstrations on the political
front as well, Cita said.

"In that environment, we saw foreign money coming into the
market and pushing stock prices higher."

Cita noted that most investors coming here were chasing
quality stocks which they still considered undervalued.

In near future, he said, the market may book some rises for a
time before people realized that the economic fundamentals were
not yet strong enough to sustain a rally.

"For the short term, people on the sidelines are moving in to
participate. So, we will see more activity in the market. After
that, I suspect the reality will set in and you will see a
correction," Cita said.

Heavyweight state-owned domestic telephone firm PT Telkom was
unchanged at Rp 4,350 yesterday, while international telephone
operator PT Indosat rose Rp 300 to Rp 17,800.

Cigarettemaker PT Gudang Garam dipped Rp 100 to close at Rp
9550, while competitor PT HM Sampoerna gained Rp 25 rupiah to Rp
2,375.

Bank Internasional Indonesia lost Rp 25 to close at Rp 300,
while state-owned Bank Negara Indonesia remained unchanged at Rp
300 and Bank Dagang Nasional Indonesia also stayed unchanged at
Rp 75. (rid)