Market facing quiet run-up to MR session
Market facing quiet run-up to MR session
JAKARTA (JP): Mounting opposition to the planned Special
Session of the People's Consultative Assembly (MPR) is likely to
overshadow the financial markets this week.
Financial analysts said on Saturday that fears that the
antigovernment rallies ahead of the meeting would turn violent
would dampen the trading mood.
They believed that the rupiah and shares would be under
pressure as such worries would prompt money and capital market
players to stay on the sidelines.
Both foreign and local investors would likely move sideways
as they could not find any fresh leads to keep them in the local
shattered market in the short term, the analysts said.
"Escalating worries over the prospect of more violence ahead
of the special session will heavily weigh down market sentiment,"
the head of research at Vickers Ballas Tamara, Noraya Soewarno,
said on Friday.
Associate director of state-owned securities firm Bahana
Securities, Andre Cita, held the same view, saying that the
overall sentiment would remain sober because most investors were
concerned about the domestic political environment.
The MPR is set to convene a special session from Nov. 10 to
Nov. 13 to set the date and the regulations for the general
election next year.
But students and opposition leaders have protested the meeting
and demanded that the government cancel it. They have said the
meeting would produce legislation that favored the ruling Golkar
party.
Analysts said they and investors were worried the rallies
could turn violent, leading to riots like those that swept the
capital in May and led to the resignation of president Soeharto.
Andre said: "It is just too bad that there are a lot of clouds
hanging over the stock market this week," he said. "This is the
biggest problem for Indonesia's financial market at the moment,".
Vickers Ballas' Noraya said that foreign investors would
certainly continue to discard their portfolio holdings, even
stocks in the mining and agribusiness sectors, which are
currently the most attractive.
"I think most investors are trying to shun the market despite
the cheap price of stocks," she said.
Like other analysts, Johanes Salim of Mashill Jaya Securities
said that the direction of the country's financial market would
be driven totally by domestic political affairs.
"The market has previously been determined by external factors
but now it is domestic affairs which will drive it," he said.
The vicissitudes of the share and rupiah markets have been
determined by the movement of the regional markets, especially
the Japanese yen against the U.S. dollar, over the past two
weeks.
The analysts said that even though the rupiah managed to close
firmer, at 7,600, last week compared to its close at 7,850 the
previous week, sentiment on the unit remained bleak as most
market participants feared building any new long dollar positions
ahead of the MPR Special Session.
"Operators will just take a wait-and-see attitude in the lead
up to the special session," a chief dealer with a local private
bank said.
They said, however, that intervention by state banks would
probably keep the rupiah from breaking through the 8,000 barrier
in the coming weeks.
A broker with Trimegah Securindolestari said that most stock
prices would continue to be under severe pressures this week and
the main price gauge would in all likelihood break the 300 level.
"I think persistent selling pressure will cause share prices
to decline and push the main price index to plunge below 300
points level," she said.
The Jakarta Stock Exchange (JSX) Composite Index closed 4.2
percent (12.64 points) lower at 300.77 last week compared to
313.41 the previous week. (aly)