Sat, 23 Aug 2003

Local markets makes quick recovery

The Jakarta Post, Jakarta

The Jakarta stock market closed higher on Friday on heavy buying of certain blue-chip shares to carve out a strong showing during the week, with dealers attributing the rise to renewed confidence in the local market after the JW Marriott Hotel bombing.

The Composite Index ended at 528.94 points, up from 525.56 the day before, jacked up by a rise in share prices of telecommunication giant Telekomunikasi Indonesia (Telkom) and cement makers.

Telkom rose 1.1 percent to Rp 4,650, while the country's largest cement maker Semen Gresik gained 8.8 percent to Rp 8,000, and Semen Cibinong was up 1.1 percent to Rp 450.

Also higher were shares in Bank Central Asia, which ended Rp 50 higher at Rp 2,950.

A dealer at a securities house said after finding that the terrorist attack on the Marriott on Aug. 5 had caused no significant impact on the country's economy, investors were now focusing on corporate action in deciding whether to buy or sell certain stocks.

"As fears for a prolonged impact of the attacks has so far subsided, investors are now focusing more on the corporate side. That has been the case in the last two weeks -- there was no more talk about the bombing," the dealer told The Jakarta Post.

Friday's closing means that the index rose by 2.4 percent over the week, or around 8 percent from the closing on Aug. 5 of 488.52 points, the lowest in two months.

The current index even surpassed the level of 505s posted before the terrorist attack.

The dealer also praised Bank Indonesia for its resolution to cut down its benchmark interest rate despite the tragedy, saying that it had helped build investors' confidence in the domestic economy.

"Upon seeing that the central bank had faith in the economy, as was shown by its continued approach on the interest rate, investors knew that all would be heading back for the better," the dealer said, adding the improved sentiment also raised hopes of future capital inflow.

On the currency market, the rupiah closed weaker at 8,425 per dollar against Thursday's closing of 8,390, as traders covered their short-dollar position ahead of the weekend.

Despite the weak performance, the local currency is seen to have made a quick recovery from the devastating impact of the blast, a dealer at a local bank said.

Friday's position was stronger than the 8,490 closing the day before the attack.

"The rupiah has indeed recovered. I think investors have come to the conclusion that the bombing will not permanently impact the economy. This will perhaps form the basis for further capital inflows," he told the Post.

He pointed to a number of events that might help strengthen the local unit, namely a further privatization drive and IBRA's assets sales.