Local share prices to remain volatile
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are expected to remain volatile this week as investors wait for details of the financial aid package from the International Monetary Fund (IMF).
Securities analysts and brokers said uncertainty over the aid package from the IMF would make stock trading activities look featureless.
"I think details and the type of financial package from the IMF will be a key factor in the stock and money market," David P. O'Neil, vice president of research at Lippo Securities, said.
He said most investors still had a wait-and-see attitude toward the financial package from the IMF, the World Bank and the Asian Development Bank.
"It's too premature to say the market has already recovered. Investors don't know yet what and how much financial assistance (will come) from the IMF," O'Neil said.
The Indonesian government announced last week that it was seeking financial help from the IMF, World Bank and Asian Development Bank to shore up the rupiah and its currency crisis.
IMF delegates are in Jakarta to discuss the government's financial aid obligations. No details of the financial aid have so far been announced but analysts speculate that assistance will include standby loans worth up to US$12 billion.
Visiting Japanese Vice Finance Minister for International Affairs Eisuki Sakakibara said Saturday that the Japanese government was ready to contribute to the aid package being prepared by the IMF.
"Sakakibara's encouraging statement sent positive signals to both stock and money markets," a local bank chief dealer said over the weekend.
The rupiah, which fell below 3,700 to the U.S. dollar in early trade Friday, recovered to 3,540/50 in the afternoon after Sakakibara's encouraging statement.
The Japanese minister's full support of the IMF-led aid package also contributed to the strengthening of share prices. The JSX composite index rose 3.594 points, or 0.70 percent, to close the week at 520.68.
The rupiah has lost over 35 percent of its value against the dollar since early July.
Total daily average turnover declined about 26 percent to 340.9 million shares last week compared to 432.20 million shares in the previous week.
Total daily average value fell 18 percent to Rp 416.51 billion ($119 million) last week compared to Rp 493.33 billion in the previous week.
Securities brokers said the market was showing signs that declining sentiment had bottomed out, with the rupiah strengthening against the dollar and no further sharp falls in the JSX composite index.
"Despite such optimism, the market will stay volatile for the next few weeks," O'Neil said.
Most blue chip stocks closed mixed last week with telecommunications firm PT Telkom falling by Rp 75 to close at Rp 3,625, Indosat by Rp 25 to Rp 8,975, Bank Internasional Indonesia by Rp 75 to Rp 800, Bank Negara Indonesia by Rp 75 to Rp 775 and Bank Dagang Nasional Indonesia by Rp 75 to Rp 550. Others went up, with cigarette-maker Gudang Garam up by Rp 125 to Rp 9,100 and HM Sampoerna by Rp 200 to Rp 6,000. (aly)