Local share prices fall to 17 month low

Local share prices fall to 17 month low

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
plunged seven percent on Monday as trading reopened after last
week's bomb blast at the bourse.

Securities dealers said that share prices dived across the
board amid uncertainty over the country's security situation,
pushing down the JSX Composite Index to a 17-month low at 411.03
-- a seven percent drop on Wednesday's close.

The rupiah, however, closed slightly higher at Rp 8,655
against the U.S. dollar as compared to Rp 8,685 on Friday despite
the drastic fall on the stock market.

Coordinating Minister for the Economy Rizal Ramli said the
plunge was only temporary. "We're optimistic that stock trading
will revive soon," Rizal said after witnessing the resumption of
trading.

Minister of Finance Prijadi Praptosuhardjo and Minister of
Industry and Trade Luhut Pandjaitan were also present at the
start of trading at a heavily guarded JSX building.

Trading was stopped on Wednesday when a bomb exploded in the
bourse's parking lot, killing at least 11 people.

Rizal said that the government would soon privatize state
enterprises and sell their assets under the Indonesian Bank
Restructuring Agency (IBRA) to help boost the market.

"We need to introduce new shares that attract investors,"
Rizal said, adding that he had asked IBRA chief and Junior
Minister for the Restructuring of the National Economy Cacuk
Sudarijanto to start selling IBRA's assets.

Securities dealers said that selling pressure took place
throughout almost the whole morning session, pushing down prices
of most blue chip shares.

"Local investors panicked, foreign investors also panicked,
everyone let go of their shares," a dealer at a local brokerage
company said.

Trading recovered slightly in the afternoon and some stocks
managed to gain ground, but overall market sentiment remained
week, dealers said.

Jasso Winarto, a senior analyst at PT Sigma Research, said
although the drop was felt by almost all companies, the index
fell largely because foreign investors sold their blue chip
stakes.

"Merrill Lynch sold Rp 60 billion worth of blue chip stocks,
Credit Lyonnais sold Rp 38 billion and SG 49 billion," he told
The Jakarta Post.

He said foreign investors' selling could continue until next
week. By then, Jasso said, the market index might reach 375.

"The word is that they (foreign investors) will keep selling
until they reach $67 million," Jasso said, quoting market rumors.

He said that too much bad news hit Monday trading.

The sudden replacement of National Police chief Lt. Gen.
Rusdihardjo by President Abdurrahman Wahid also affected the
market. Investors considered it interference in the law, rather
than an act of pressure to resolve the bombing, Jasso said.

U.S. Defense Secretary William Cohen's statement that
Indonesia risked international isolation if it failed to disarm
Timorese militias was another blow, he added.

Cohen was in Jakarta for a one-day visit.

The U.S. and the United Nations have demanded Indonesia disarm
Timorese militias, after they allegedly killed three UN aid
workers in Atambua, West Timor.

"What investors fear most from the Atambua incident is
international isolation," Jasso said.

Stock analyst Budi Ruseno H.P. of PT Bhakti Investama also
attributed panic selling for the year's record low performance at
the JSX.

But he added that external factors had also played their part,
in particular investors' anticipation of the U.S. Federal Reserve
raising its interest rates. (bkm)