Market gives positive response to IMF-Plus formula

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)