Market positive over Habibie's political pledge

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)