Market reacts positively to new budget
Market reacts positively to new budget
JAKARTA (JP): The local bourse reacted positively to the
1999/2000 zero-growth State Budget announced by President B.J.
Habibie early on Tuesday, with blue chips gaining ground in
moderate trading.
The rupiah also perked up on news of the conservative budget,
rising to Rp 7,825 against the U.S. dollar from Rp 7,925 at the
close of the previous day's trading.
Share prices surged through the key 400-point level, ending
3.6 percent firmer as investors bought shares across the board.
"The market believed that all the macroeconomic assumptions in
the 1999/2000 State Budget seemed realistic," a chief dealer with
a joint venture bank said.
Money market dealers said the rupiah, which opened at
7,925/7,950, was dull in the morning trading session, but
ultimately strengthened.
Dealers said the rupiah's gain could also be attributed to the
27-month high of the yen to the dollar.
The yen closed at 111.-- against the dollar on Tuesday,
lifting regional currencies along with it.
"Besides the release of the State Budget, a strong yen was
also behind the rise of the rupiah," one dealer said.
Financial analysts and dealers said macroeconomic assumptions
unveiled by the government on Tuesday were still in line with
previous government announcements, in which economic growth in
1999/2000 was expected to be flat, against the 12 percent
contraction predicted for the current fiscal year ending in
March.
Average inflation rate was forecast at 17 percent, down from
66 percent expected in 1998/99, and the rupiah was set at an
average 7,500 against the dollar in 1999/2000 compared to 10,600
in the year to March.
"I think the rupiah rate of 7,500 seems very realistic
although some may argue about it," the dealer said.
Taking their lead from the rupiah, share prices on the Jakarta
Stock Exchange (JSX) soared, with the main benchmark price index
rising 14.24 points to 408.70 on a total turnover of 221 million
shares valued at Rp 191.47 billion ($24.54 million).
Advancers outnumbered decliners by 88 to 14, with 64 stocks
unchanged.
Stock analysts and brokers said the market was bullish on
Tuesday because the budget's macroeconomic assumptions were in
line with the country's dire economic condition.
"The market was bullish, with most investors entering the
market in the second session after the release of the
government's state budget," said Vonny Juwono, an institutional
sales broker with Trimegah Securindolestari.
Vonny said that several foreign brokerages, such as Lyonnais,
Jardine Fleming Nusantara and Danareksa, which had stayed away
from the local market earlier this week, reentered on Tuesday
with main buying targets of certain blue-chip stocks. (aly)