Local stocks continue to surge, rupiah stable

JAKARTA (JP): Share prices on the local market continued to gain ground on Tuesday as the rupiah stayed at the Rp 9,000 level against the U.S. dollar.

Stock brokers said the firm rupiah coupled with a relatively calm political situation encouraged foreign investors to make significant purchases on certain blue chip stocks.

The rupiah, which broke several psychological barriers last week, closed slightly firmer at 9,000 against the American dollar on Tuesday compared to Monday's close at 9,050.

"Investors feel comfortable enough with the latest developments in the country's economy," an institutional broker with Trimegah Securindolestari said.

He said that the interest rate cut in the domestic banking system by up to eight percentage points to below 60 percent per annum on Monday coupled with the stable political situation had improved the capital market's sentiment.

"The investors shrugged off today's students demonstration. It has become a common occurrence in this country," BNI Sekuritas analyst Fitri Murniawati said.

Hundreds of university students staged a rally outside the House of Representatives building on Tuesday, demanding President Habibie stamp out corruption, collusion and nepotism and hold a fair general assembly meeting next month.

The Trimegah broker said that most foreign brokerage firms placed large buying orders, especially with telecommunications and mining firms, in the afternoon following the government's plan to further divest its stake in PT Indosat, PT Aneka Tambang and PT Tambang Timah this fiscal year.

"Investors are delighted with good news like this and this prompts them to enter the market," Fitri said.

The Jakarta Stock Exchange (JSX) Composite Price Index closed 2.14 percent firmer or 6.57 points to 313.98 on a total turnover of 197.82 million shares valued at Rp 235.15 billion changing hands.

Indosat rose Rp 350 to Rp 7,500, on a turnover of 601,500 shares, state telecommunications firm PT Telkom rose Rp 175 to Rp 2,000, with 16.05 million shares changing hands, mining firm PT Tambang Timah rose Rp 500 to Rp 5,200 on 1.41 million shares, and gold producer PT Aneka Tambang climbed Rp 100 to Rp 1,425, with 23.23 million shares changing hands.

But BNI's Fitri said that investor confidence in the country had not returned completely as the country's long-term economic prospects remained bleak.

"If there are foreign investors buying, it will be for the short term as they will shun our market if conditions turn sour," she contended.

Like the stocks, the beleaguered rupiah remained relatively stable against the American dollar.

After opening at 9,050, the rupiah closed at 9,000 in the Jakarta spot market on the back of state-bank dollar selling for the currency.

"Investors are still scared to enter the market and they prefer to take a wait-and-see attitude,' a chief dealer with a joint venture bank said.

Dealers said that the crippled rupiah, which hit an intraday high of 8,900, was expected to trade between 8,800 and 9,000 in the coming days. (aly)