Market gives positive response to IMF-Plus formula

JAKARTA (JP): Prices on the Jakarta Stock Exchange (JSX) rose 2.9 percent yesterday on positive market reaction to the government's new formula to improve the country's ailing economy, stockbrokers said.

They said local investors bought selective stocks, such as PT Telkom, Indosat, Gudang Garam and other mid-size stocks, to push up the benchmark price.

The rupiah, which opened at 8,800/8,900 in the morning session, closed at 8,850 against the U.S. dollar yesterday after touching a day high of 8,750 before the break for lunch, currency dealers said.

Stockbrokers said local brokerage houses like Makindo, Trimegah Securities, Bomar Securities, Bahana Securities, Danareksa Sekuritas, UBS Securities and Layang Megah Securities dominated trading transactions.

"I think foreign brokerage houses were not as active as local ones," a broker with Trimegah Securities said.

The JSX Composite Index rose 14.35 points to close at 496.72 points yesterday compared to 482.37 points last Friday.

About 450.51 million shares changed hands on the regular market valued at Rp 442.83 billion (US$50.32 million).

Stock analysts said the government plan to introduce new measures which President Soeharto called an "IMF-Plus" concept was the main cause for the rise in stock prices yesterday.

Tjandra Kartika, head of research at Mashill Jaya Securities, said the market speculated that the "IMF-Plus" plan would include a fixed exchange rate for the rupiah and a new program for rescheduling and reducing Indonesia's mounting foreign debt.

"This is really positive for the market because the government addressed both the (country's) short-term and long-term problems at one time," he said.

Head of research at Trimegah Securities David Chang said rising inflation and the unstable rupiah rate against the American dollar were the country's most urgent issues in the short term before proceeding to the implementation of long-term reforms agreed to with the International Monetary Fund (IMF).

"The market and the G-7 members of the developed countries want to see how Indonesia will solve this problem first," he said.

Most stock analysts in Jakarta shared a common view that pairing the IMF reforms with some other elements, such as pegging the rupiah to a foreign currency at a fixed exchange rate, would improve the country's ailing economy.

"The market welcomes the government's strong commitment to introduce new bold measures to complement the IMF reform package," Mashill's Tjandra said.

"The government's IMF-Plus package will eventually eliminate market confusion," Tjandra said.

President Soeharto stated in his accountability address Sunday that he favored an "IMF-Plus" concept to stabilize the battered rupiah which has lost more than 70 percent of its value against the American dollar.

Traders said the currency market was largely inactive yesterday as most operators remained on the sidelines.

"Local and foreign operators remained calm for the whole trading day yesterday waiting for further developments from the General Session of the People's Consultative Assembly," a chief dealer with a joint-venture bank said. (aly)