Market positive over Habibie's political pledge

JAKARTA (JP): The country's financial market is buoyant at President Habibie's commitment to pursue political reform, analysts said.

Currency dealers said the rupiah improved slightly to 10,800 against the U.S. dollar in the spot market yesterday in very thin trading.

Stockbrokers said share prices on the Jakarta Stock Exchange (JSX) closed mostly higher yesterday, but the JSX Composite Index was dragged down by the dumping of politically connected stocks and arbitrage selling of dollar-dominated stock, including giant Telkom.

They said trading activities in both the currency and stock markets remained lackluster because most operators were reluctant to take any position amid the current uncertainty.

The head of research of Bahana Securities, Bruce Rolph, said most investors stayed on the sidelines, closely watching the country's political development.

"Though the political and social situation has improved slightly, investors are still in a wait-and-see position," Rolph said.

President B.J. Habibie vowed yesterday to hold a general election as soon as possible, granted amnesty to prominent political prisoners and said he backed democratic reform, including a limit on the presidential term of office.

Rolph said improvement in the country's human rights record would eventually lure foreign investment here, including portfolio investments.

"An improvement in human rights implementation should lure investors to enter Indonesia's market in the medium and long term," Rolph said.

Currency dealers said the spot rupiah closed at 10,700/10,800 against the American dollar, slightly firmer than its close at 10,800/11,300 Friday last week.

A local bank dealer said the market would closely follow the country's political development and the review of the economic program by the International Monetary Fund this week.

The rupiah could improve further when the government frees more political prisoners and fulfills its massive political reform commitments, or when the IMF approves the disbursement of its loans.

While most stocks ended higher on the stock market yesterday, the JSX Composite Index dropped 1.2 percent due to arbitrage selling of Telkom and persistent selling pressure on stocks related to former president Soeharto and his cronies, especially Sudono Salim.

"People are starting to look at stocks linked to groups closely associated with former president Soeharto," Rolph said.

The JSX Composite Index fell 5.58 points to 439.55 points on a total turnover of 260.16 million shares worth Rp 312.72 billion (US$28.95 million) changing hands on the regular market.

Gainers outpaced losers by 105 to 39, 51 stocks were unchanged.

Market leader, domestic telecommunications firm Telkom was down Rp 300 to Rp 3,525 on 7.6 million shares traded. Another telecom stock, Indosat, dropped Rp 750 to Rp 14,550 on 451,500 shares traded.

The stock price of Salim Group's Indocement fell Rp 400 to Rp 3,000 on a total 16,500 shares, Indofood Sukses Makmur slid Rp 150 to Rp 2,650 on 909,500 shares.

Soeharto-linked Bimantara Citra fell Rp 25 to Rp 350 on a total turnover of 9.25 million shares and Citra Marga Nusaphala Persada rose Rp 25 to Rp 425 on 7.05 million shares. (aly)