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)