Local stock trading seen to remain quiet

JAKARTA (JP): Trading activities in the local stock market are again expected to remain quiet during this four-day trading week as most investors are taking their year-end holidays.

Securities analysts said that share prices in the battered local market, which had been declining in the lead-up to Christmas last week, would possibly slide further.

"Investors are mostly on their holidays so the market will be really quiet in the coming weeks," Vonny Juwono, an institutional sales broker with Trimegah Securindolestari, said.

The analysts said that offshore fund managers, who had been expected to re-enter the local market for window dressing operations in their efforts to prop up their asset portfolios before the close of the year, had remained out of the market.

They said that foreign investors were no longer tempted to prop up their portfolio investments in the local market because of a lack of fresh incentives and unresolved economic and political crises at home.

"Window-dressing would only take place if the country was in a normal condition. However, the country is in a dire situation, so there are no foreign investors expected to enter the market," the head of research at Mashill Jaya Securities, Edhi Widjojo, said.

Stockbrokers and currency dealers said that trading volume in the local financial market had dwindled sharply ahead of Christmas day last week, with only 105 million shares of stock worth Rp 80.76 billion being traded on Thursday, while the rupiah's trading volume had dipped to less than US$50 million.

Currency dealers and brokers said that most market participants and investors had stayed clear of the local financial market during the long year-end holiday.

They said that the decline in trading volume in the stock market and the currency market would continue until investors and market participants found fresh incentives to enter the battered financial market.

"Trading activities will continue to remain quiet this week and until early January," Trimegah's Vonny said.

Brokers said that bearish sentiment in the local market would likely force the benchmark price index in the local bourse to fall below the key 400 point level in the upcoming week.

"The main index might hit its support level of 390 points," Vonny said.

The Jakarta Stock Exchange's (JSX) main price index closed 2.10 points lower at 401.85 on Thursday of last week compared to the 403.96 closing the previous week.

The daily average turnover fell 35 percent to just 151.44 million shares changing hands last week compared to 235 million shares the previous week.

The average daily transaction value declined by 44 percent to Rp 149.63 billion ($19.18 million) last week compared to Rp 269.74 billion the previous week.

Financial analysts said that the rupiah, which closed slightly lower at 7,850 on Thursday, would continue to be traded in a narrow range of between 7,500 to 8,000 during this short trading week.

Currency dealers said that offshore market participants did not want to build any fresh positions in the lead-up to the end of the year because they were still in a holiday mood.

Also, there was no fresh impetus to lure them back into the local currency market.

"If there is any movement in the rupiah, it will be driven by dollar bids from domestic banks," a chief dealer with a joint venture bank said.

Currency dealers said that the rupiah lost ground to close at 7,850 on Thursday due to fresh dollar bids by local commercial banks that dragged down the rupiah.

"If domestic banks bid the dollar, then the rupiah will likely fall further," the dealer said.

But dealers said that even if there was any movement, trading volume would be very limited. (aly)