Local stocks up in moderate trading

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) rose 0.3 percent in moderate trading yesterday after President Soeharto was sworn in as the country's president for a seventh consecutive five year term, stockbrokers said.

They said uncertainties over the country's political situation faded away after Soeharto was sworn in by the People's Consultative Assembly yesterday.

"Though the market had anticipated Soeharto to resume his presidential post, yesterday's ceremony really marked another turning point for the country's political stability," a broker with a local securities house said.

Stockbrokers said most investors were currently waiting for the announcement of the new cabinet line-up later this week, especially its economic team.

A broker with Trimegah Securities said most investors in the local market speculated yesterday that Soeharto could announce the setting up of a currency board system (CBS) in his renomination speech to prop up the rupiah.

"The President, however, did not mention anything about the CBS in his speech. This improved the trading mood," an analyst with a local securities house said.

Bruce Rolph, head of equities at Bahana Securities said, however, that many foreign investors sold stocks despite the improvement in the general market mood.

He said most foreign brokerage houses like ING Barings, Credit Lyonnais Securities, Merrill Lynch Indonesia, Jardine Flemming Nusantara and SBC Warburg sold blue chip stocks.

"Foreign investors are a bit upset with the Indonesian government as it has not given any clues on the ways it will try to improve the country's teetering economy," he said.

He said foreign brokerage houses were net sellers yesterday.

The JSX Composite Index ended 1.39 points higher at 491.87 yesterday from 490.47 the previous day.

A total of 438.89 million shares changed hands on the regular market valued at Rp 546.11 billion (US$53.54 million).

Rupiah

As stock prices rose slightly, the rupiah in the currency market closed at 10,100/10,300 against the U.S. dollar yesterday after hitting a day high of 9,600 in the morning session, currency dealers said.

Yesterday's close was 3 percent higher than the previous day's close of 10,500/10,700.

Dealers said the rupiah, which opened at 9,600/9,800 against the dollar, was traded in a narrow range.

They said trading activity in the currency market remained thin as most operators were waiting for the government to announce its latest plans to strengthen the rupiah and improve the country's paralyzed economy.

"Most offshore operators, especially from Singapore, do not want to do anything in the market because they have no clue whether the rupiah is going strengthen or weaken," a chief treasurer with a joint-venture bank in Jakarta said.

Dealers said most investors were focussing on further developments over the heated conflict between Indonesia and the IMF concerning the implementation of economic reforms tied to the international institution's $43 billion bailout package. (aly)