Local troubles expected to weigh heavily on JSX

JAKARTA (JP): Worries over continued student demonstrations and uncertainty surrounding the Bank Bali scandal could further dampen trade on the Jakarta Stock Exchange (JSX), analysts said.

An analyst from PT Bahana Securities, Martin Panggabean, said whether students continued their demonstrations would be important in determining the trading direction.

He also said a number of foreign investors were more concerned with the banking scandal than the demonstrations.

"The Bank Bali scandal is their main concern because it is directly related to Indonesia's economic recovery," Martin said, adding that a transparent resolution of the banking scandal was necessary for the country's economic recovery.

Mass student demonstrations hit the capital's main streets and other major cities last week in protest of the controversial state security bill.

The protests continued even after the government announced on Friday evening it would not ratify the bill.

Analysts said the announcement, which came a day after the House approved the bill, was too late and unlikely to satisfy the students, who rallied on Saturday to mourn those who were killed during the previous two days of protest.

Media reports said seven people were killed during the demonstrations on Thursday and Friday.

Uncertainty over the government's commitment to resolving the Bank Bali scandal also continues to weigh on investors, although the House's special team investigating the case completed its probe and publicly issued its findings, including high-level officials and businessmen alleged to have been involved in the scandal.

The House recommended the government immediately suspend those officials implicated in the scandal, but President B.J. Habibie rejected this proposal, saying that any measures had to wait until after the legal process had run its course.

Martin said new investors would avoid entering the market for the time being and a number of investors would exit the market, adding this would pressure the index, which could fall further this week and breach the 500 level.

"But I don't see the index plummeting far below 500 points," he said, adding that he expected trade volume to be light at between Rp 200 billion and Rp 400 billion per day, thus not placing to much pressure on the market.

An analyst from PT Arga Artha Sekuritas, Nurkhamid, was of a similar opinion, saying the JSX index would be flat this week with low trading volume.

"The market will be volatile and it will be difficult to see any clear direction," he said.

He said the index would not take a huge fall because the market had already factored in the Bank Bali scandal, East Timor and possible student demonstrations ahead of November's General Session of the People's Consultative Assembly.

"These negative items drove the JSX index down sometime ago," he said.

However, he added that the bearishness on the JSX was not solely due to domestic politics, but also was related to regional events.

"The regional bourses have been down on the strengthening of the Japanese currency the yen," he said.

He did have some hope the release of third quarter financial statements from listed companies would balance the negative sentiments.

"I predict listed companies will have better financial performances to report for the third quarter as compared to the previous two quarters. This might positively effect the market," he said.

The JSX Composite Index fell 5.4 percent to 517.54 points last week from 547.01 points the previous week.

Daily average turnover last week was some 413 million shares, compared to 355 million the previous week.

Also on the decline was daily average transaction value, falling to Rp 388 billion from Rp 501 billion the previous week.

Last week's top gainers were PT Pool Asuransi Indonesia, rising 33.33 percent, PT Bank Universal, which went up 25 percent, and PT Hexindo Adiperkasa, which ended the week 23.64 percent higher.

The top losers on the week were PT Putra Surya Multidana with a 50 percent drop, PT Panca Wiratama Sakti, which took a 38.46 percent tumble, and PT Bumi Modern, which fell by 28.57 percent on the week.

The top brokerage firms by transaction value were PT ING Barings Securities with Rp 349.4 billion, PT Jardine Fleming Nusantara with Rp 334.7 billion and PT Danareksa Sekuritas, which did Rp 244.2 billion in business.

Meanwhile, the rupiah closed at 8,765 against the U.S. dollar last week, lower than its 8,230 close the previous week. (udi)