Local stocks may surge on new deal with IMF

Local stocks may surge on new deal with IMF

JAKARTA (JP): Trading on the Jakarta Stock Exchange (JSX) is
expected to improve next week following the signing of the
government's letter of intent with the International Monetary
Fund (IMF).

Analysts said the new letter of intent, which outlines the
government's priorities in managing the country's economy, gives
investors more courage to enter the equity market.

One analyst said: "The economic-reform targets as stated in
the letter of intent reconfirm investors' belief about the
positive prospect of the local stock market."

He said that the deal, which would also allow the government
to get fresh funds from the IMF, would give new blood to the
economy.

The government signed a new deal with the IMF on Thursday,
clearing the way for the fund to resume financial support to the
country after it was once delayed in September last year over a
banking scandal.

The IMF's executive board is scheduled to meet on Feb. 4 to
approve a total of US$5 billion in loans to Indonesia to finance
its reform program over the next three years.

The stock analysts also said the recurrence of religious
conflicts in some parts of Indonesia could exert a negative
sentiment to the market, but would only be a minor factor.

Rudy Triyunanto from Bumi Daya Sekuritas said, "We expect the
religion-related civil tension in Ambon and Lombok not turn into
something that can significantly affect the market."

The market hoped such religious tension would be temporary as
the riots appeared to be merely incited by provocateurs who
wanted to create instability, said Rudy.

A gathering last week of about 5,000 people on Lombok island,
West Nusa Tenggara, who were protesting the killings of Muslims
in the province of Maluku suddenly turned violent, setting fire
to several churches in the town.

The violence finally settled down, but fear of renewed tension
remains.

Meanwhile, hundreds of Muslims in the Maluku province staged a
street protest last week after the body of a Muslim man was found
dumped in a street of a Christian neighborhood in the province
capital of Ambon.

Another analyst said the religious riots in Ambon -- which
some feared could have a contagious effect on other parts of the
country -- have caused more concerns to foreign investors then to
local players in the market.

"Foreigners were more sensitive with the unrest issues as they
were seen selling some of their blue chip holdings late last
week," he said.

Rudy said next week's trading and the following few weeks'
were an important basis for the market's momentum toward reaching
a widely expected 1,000 level Composite index in the second
semester of the year.

"In general, the market will keep moving on its recovery trend
next week, receiving only a minor effects from the riots issue,"
he said over the weekend.

Currency dealers said the rupiah would not fluctuate too much
this week, assuming the violent riots do not develop into
anything worse.

They added that the market's reaction toward the draft State
Budget presented by President Abdurrahman Wahid last week was
positive, with some caution over the realization of the budget.

The JSX composite index decreased by 3.8 percent to close at
664.69 points last week, from 690.89 the previous week.

Its daily transaction value decreased to Rp 1.12 trillion last
week, compared to Rp 1.97 trillion the previous week.

The average daily turnover was also down to 1.33 billion
shares last week from 2.25 billion shares the previous week.

Last week's top gainers were PT Transindo Multi Prima, whose
shares leaped 457.81 percent, PT Mandiri Intifinance, 103.85
percent, and PT Clipan Finance Indonesia. 94.74 percent.

The week's big losers were PT Inti Indorayon Utama, whose
shares fell 52.63 percent, PT Bintang Mitra Semestaraya, 37.88
percent, and PT Tri Polyta Indonesia, 34.33 percent.

The top brokerage firms by transaction value were PT Danareksa
Sekuritas with Rp 534 billion in transactions, PT Trimegah
Securindolestari, Rp 448.79 billion, and PT Ciptadana Sekuritas,
Rp 420.14 billion.

The rupiah depreciated slightly to close the week at 7,280
against the U.S. dollar, compared to its 7,210 close the previous
week. (udi)