Local share prices surge despite political concerns

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) closed higher on Wednesday, despite market fears of possible political instability on the first day of the country's campaigning period.

The Jakarta Composite Index rose 2.72 percent or 15.7 points to close at 593.60.

Dealers said the government had a vested interest in making the JSX index look positive on the first day of the campaigning period.

"The government seems to intervene in the stock market at every political event, creating an artificial economic impact." a local dealer said.

He said a politically-triggered bearish equity market would make the government "look ugly" and should not be allowed to happen.

However, an institutional sales broker at Trimegah Securindolestari, Vonny Juwono, said the day's index surge was the result of market reaction to the peaceful campaign.

"Investors promptly built up their confidence after realizing that the first day of the election campaign had gone smoothly without any unrest," she said.

The 48 political parties contesting the country's June 7 election started their campaigning on Wednesday. The campaign period is scheduled to end on June 5.

"The market was negative at the day's open, but from about 10 o'clock in the morning it turned around and continued to be positive until closing," Vonny said.

Blue chip stocks pushed the market, as once their prices were down, investors were quick to make purchases, according to Vonny.

"For the last couple of days prices of blue chips have been corrected. They have been relatively slow to rise during the generally bullish market. Now, investors are back for these blue chips."

Vonny agreed that to some extent the decrease of the central bank's benchmark rate had a role in the market rally.

On Wednesday, Bank Indonesia auctioned Rp 15.32 trillion (US$1.9 billion) of one-month promissory notes, at a weighted interest rate of 28.88 percent, down from 29.99 percent last week.

Banking stocks were traded moderately with prices remaining stable, Vonny added.

Bank Danamon stayed unchanged at Rp 400 on some 23 million shares traded, Bank Niaga was down by Rp 50 to Rp 500 on some 27 million shares traded.

Bank Internasional Indonesia was down by Rp 25 to close at Rp 250 on heavy trading of some 274 million shares. Bank Bali declined Rp 25 to Rp 1,050 on about a half million shares traded.

State-owned Telkom jumped Rp 175 to close at Rp 4,300 on some 13 million shares traded. International call operator Indosat rose Rp 400 to Rp 16,400 on light trading, after the government announced a plan to release 5 percent of its shareholding in the company at a price above Rp 16,000 per share.

Meanwhile, the Associated Press reported that Asian stock markets closed mostly lower Wednesday, dragged down by jitters over a possible rise in U.S. interest rates.

The U.S. Federal Open Market Committee met Tuesday and decided to leave interest rates unchanged, but said it was inclined to adopt a tighter monetary policy to curb inflationary pressure.

In Tokyo, the largest market in Asia, concerns over the rate rise pulled the key index down 1.5 percent, setting a trend for most markets in the region.

The benchmark 225-issue Nikkei Stock Average shed 250.44 points, closing at 16,128.18. The average now has fallen a total of 819.18 points in five days, including Tuesday's 42.40-point drop, or 0.26 percent.

In Hong Kong, The blue-chip Hang Seng Index fell 223.96 points to close at 12,403.14, its lowest close since April 15. On Tuesday, the index gained 38.50 points.

In Bangkok, Thai share prices closed slightly higher. The Stock Exchange of Thailand, or SET, Index edged up 1.95 points, or 0.4 percent, to 483.50.

In Manila, Philippine stocks ended sharply lower as investors cashed in on recent gains. The 30-company Philippine Stock Exchange Index closed 77.48 points, or 3.1 percent, lower at 2,390.82.

In Seoul, share prices closed higher for the second consecutive day. The Korea Composite Stock Price Index rose 5.69 points, or 0.7 percent, to 734.98.

In Taipei, share prices ended slightly higher. The key Weighted Price Index closed up 29.09 points, or 0.4 percent, at 7,614.60.

In Sydney, Australian share prices ended lower, the All Ordinaries Index closing at 2,981.2, down 18.4 points, or 0.6 percent.

In Wellington, New Zealand share prices closed lower, the benchmark NZSE-40 Capital Index falling 19.91 points, or 0.9 percent, at 2,170.69. (udi)