Market upbeat following Soeharto's speech

Market upbeat following Soeharto's speech

JAKARTA (JP): The country's financial market responded
positively to President Soeharto's offer yesterday to step down
after fresh elections, but analysts warned of more uncertainty.

The rupiah bounced back sharply to 12,000 against the U.S.
dollar after Soeharto announced his offer, compared to 16,000 in
early trade on the Jakarta spot market, currency dealers said.

Stock prices on the Jakarta Stock Exchange (JSX) followed
suit, making 6.4 percent gains, stockbrokers said.

However, trade on both the rupiah and local stocks was
extremely thin as most investors were increasingly jittery over
the country's political uncertainty.

Analysts, nevertheless, said President Soeharto's offer to
step down after fresh elections was the kind of statement the
market had wanted to hear.

"President Soeharto's promise to step down is good for long-
term prospects. We expect it will lead to a smooth transition of
leadership," Mirza Adityaswara, an analyst at WICarr Securities,
said.

Currency dealers said the strengthening of the rupiah was a
reflection of market response to what they called market-friendly
statements from Soeharto.

"But it is just temporary and the market response was
exaggerated," a local bank dealer said, pointing out that the
rupiah could easily drop to a new low if the situation worsens.

He said the prospect of more violence still loomed in Jakarta
with a mass demonstration called by prominent Moslem leader Amien
Rais, who vowed to assemble about one million people to press
Soeharto to step down soon.

Such mounting political uncertainty had widened the rupiah-
dollar trading band to over 1000 points, which could easily send
the rupiah sliding to a low level in the coming days, he said.

As the rupiah strengthened, stock prices rose 6.4 percent,
with the JSX Composite Index closing 24.96 points higher to
413.82 points from 388.91 points the previous day on a total
volume of 99.61 million shares valued at Rp 86.4 billion (US$7.03
million) -- compared to an average of Rp 300 to Rp 400 billion a
day.

"The increase is a surprise. There is no logic to explain the
increase," WICarr's Mirza said.

He noted that fund managers were still digesting the current
political development following Soeharto's promise to step down.

A broker with Trimegah Securindo Lestari said the increase in
the index was supported by speculative-driven purchase of
politically well connected stocks like Bimantara Citra and Astra
International, stock brokers said.

The stock price of the giant conglomerate Bimantara Citra rose
Rp 125 to Rp 425 on a total volume of 9.11 million shares
exchanging hands, and Astra International rose Rp 100 to Rp 1,000
on a total volume of Rp 16.45 million shares.

Stockbrokers said most investors were still on the sidelines
due to worries over the future of the country's political
situation.

Yesterday's stock trading on the local bourse was marked by a
demonstration by stockbrokers, analysts and banking employees
outside the Jakarta Stock Exchange (JSX) building demanding
President Soeharto step down.

About 300 protesting professionals chanted: "Step down
Soeharto" during the lunch break period in a peaceful, 20-minute
demonstration.

But the protesters returned to their offices after security
forces dispersed the crowd. (aly)