Market sentiment may remain negative

Market sentiment may remain negative

JAKARTA (JP): Equity analysts say the planned meeting between
top political leaders in Yogyakarta on Tuesday will not
meaningfully effect share trading on the Jakarta Stock Exchange
(JSX) this week.

The analysts said on Saturday that market sentiment would
remain negative despite the gathering of key figures in the
country's political elite.

They did not believe that the meeting would be able to ease
the growing domestic political tension ahead of the Aug. 7 annual
meeting of the People's Consultative Assembly (MPR).

"Those in the political elite will just be talking nice things
(at the meeting). But what is actually happening in the real
arena is totally different," said Mirza Adityaswara of Indosuez
WI Carr Securities.

In an effort to help reduce tension in the run-up to the MPR
meeting from Aug. 7 to Aug. 18, Sultan Hamengkubowono X of
Yogyakarta has invited the nation's four top political figures to
a dialog in Yogyakarta on Tuesday.

President Abdurrahman Wahid, Vice President Megawati
Soekarnoputri, House of Representatives (DPR) Akbar Tandjung and
MPR Speaker Amien Rais.

"Tuesday's meeting is non-event for the market. It is good
news that they plan to meet, and when they really meet there will
be happenings on the market as a result," Mirza said.

He said there were market expectations about the Tuesday
summit, but that if it failed to happen, disappointment could add
to the negative market sentiments.

But Mirza said that the fact remained that relations between
the President and DPR members had been bad since the
interpellation session at the DPR took place two weeks ago.

"They (DPR members) are just holding back for the moment," he
said, hinting that things might appear better than the reality
until a real showdown occurred.

Any good news for the market this week will be short-lived,
because medium-term sentiments are negative for the next three to
four months, according to Mirza.

"As has been hinted at by a top political figure, the
sentiment among legislators to unseat President Abdurrahman is
still around. And the process of unseating the president under
the existing procedures will take between three to four months,"
he said.

"How can we trust any positive news if fears of real political
shocks from a change of the country's president linger," he
added.

Sharing pessimism with Mirza, an analyst from a joint-venture
securities company said the situation was lost, at least until
December.

"I could have been concerned and stressed about the
developments up until two weeks ago. But now I can relax because
I no longer have anything to worry about, since everything has
gotten so bad and unmanageable," he said.

He said Indonesia would continue to carry a heavy economic
burden.

"The JSX (Composite Index) performance -- in the short and
long term -- will mirror this," he said.

The JSX Composite Index lost two percentage points last week,
closing at 498.80 points from 508.79 points the previous week.

Its daily average transaction value keeps falling also -- it
booked Rp 228 billion last week, compared to Rp 300 billion the
previous week.

The daily average turnover, however, increased to 428.7
million shares last week from some 421 million shares the
previous week.

It was a similar story at the currency market, where the
rupiah was very much unmoved within its narrow range of between a
few tens of points around the 9,000 level, as players worried
about continuing attempts by the President's political opponents
to topple him.

However, some currency dealers said the rupiah would get a
boost this week from the government signing of the letter of
intent with the International Monetary Fund (IMF), to allow the
next disbursement of the IMF bailout loan package for the
country.

The rupiah weakened very slightly last week to 8,970 against
the U.S. dollar, compared to the previous week's close of 8,935.
(udi)