Local stock prices likely to consolidate this week

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) are expected to consolidate this week after making a 10 percent gain last week, securities analysts have said.

The analysts said foreign funds might still enter the market but profit taking by local investors would make most prices stagnant.

Head of research at Pentasena Securities Mohammad Syahrial said most investors had not decided whether to make any long term investment in the country's financial market.

"This is why many investors are taking profits within just a few days," he said.

But other analysts said the benchmark Composite Index would not fall below the psychological 500-point level this week even though the trading outlook was not so promising.

Syahrial said some investors would take profits if the main price index hovered between 530 and 550 points this week.

"If the index goes down to hover between 500 and 530 points, more investors will enter the market again," he said.

According to analysts, the strengthening of the rupiah was crucial to the stock trading outlook.

The rupiah closed stable at 9,400/9,600 against the U.S. dollar Friday following central bank intervention, up from its close of 10,300 last Monday.

Stock analysts said the announcement of the government's new data on private corporate debt, which last week helped revive trading activities, would make investors more confident about the economy.

Chairman of the Corporate Foreign Debt Settlement Team, Radius Prawiro, announced Friday that private Indonesian companies accounted for only US$23.07 billion of the $73.96 billion in foreign debts owed by the private sector with the remainder owed by foreign firms and joint venture companies.

"The new data tells us that the private sector problem is not as serious as we thought," one analyst said.

Other analysts said that some foreign investors were actively trading in the market but foreign players were mostly still reluctant to make big orders due to uncertainties in the country's political situation.

"Most investors who entered the market over the past few weeks were short-term investors. They are still cautious about the country's long term prospects especially the political situation," Syahrial said.

Riot

An angry mob attacked shops owned by ethnic Chinese in the main shopping street of Bima town, West Nusa Tenggara on Saturday due to rising prices of basic goods.

Savage protests about the soaring prices of staple goods erupted in several towns on the main islands of Java and Sulawesi before and after the Idul Fitri holiday.

"Riots like this will effect most business activities in the coming weeks especially prior to the Presidential election in March," an analyst with a joint venture securities firm said.

Members of the People's Consultative Assembly will convene from March 1 to March 11 to elect a new president.

The JSX Composite Index ended 21.94 points higher to close at 535.42 last week from 485.93 the previous week.

The daily average turnover rose 132 percent to 789.62 million shares changing hands last week against 339.26 million shares the previous week.

The daily average value rose 48 percent to Rp 791.61 billion ($83.32 million) last week from Rp 532.22 billion the previous week.

Stock brokers said last week's turnover was higher than the previous week because there were only three trading days the previous week.

Most regional markets including Indonesia were closed on Jan. 28 and Jan. 29 to celebrate the Lunar New Year holiday and Idul Fitri holiday.

Blue chip stocks ended mixed last week with state-owned telecommunications firm Telkom falling Rp 75 to Rp 4,275 and Bank Internasional Indonesia Rp 50 to Rp 575. Bank Negara Indonesia and Bank Dagang Nasional Indonesia remained unchanged at Rp 600 and Rp 325 respectively.

Satellite operator Indosat rose Rp 600 to Rp 16,800, cigarette maker Sampoerna Rp 250 to Rp 5,625 and Gudang Garam Rp 2,150 to Rp 14,200. (aly)