Markets unimpressed by budget draft

Markets unimpressed by budget draft

The 2005 state budget draft unveiled by President Megawati
Soekarnoputri failed to lift sentiment in the stock market, which
remains anxious about soaring oil prices.

Dealers said that many investors considered the budget overly
optimistic.

The Jakarta Stock Exchange composite index ended down 3.970
points, or 0.5 percent, at 751.950 on Monday. Decliners led
gainers 66 to 29, with 82 stocks unchanged. Volume was 357
million shares valued at Rp 317 billion.

"We had many negative factors," said a trader with Kuo Capital
Securities as quoted by Dow Jones.

The negative factors include rising political uncertainty
ahead of the September 20 presidential election, soaring oil
prices which have depressed stock markets around the world and
the possibility of Bank Indonesia raising its benchmark interest
rate amid stronger inflationary pressure and to help defend the
rupiah.

Dealers said that investors would continue to sell bank shares
on worries that a higher interest rate would lower their
earnings.

Bank Danamon fell by Rp 75, or 2 percent, to Rp 3,450 and Bank
Central Asia (BCA) was down Rp 25, or 1.4 percent, to Rp 1,800.

Dealers said they expected the market on Wednesday to trade
lower on further selling in select blue chips. The Indonesian
markets were closed on Tuesday for Independence Day celebrations.

Meanwhile, the rupiah closed lower for the second straight
session as local companies purchased dollars to meet their month-
end obligations.

The dollar ended at Rp 9,280, weaker than its close of Rp
9,265 on Friday.

Dealers also attributed the rupiah's fall to the dollar's rise
against its major rivals and surging oil prices.

Higher oil prices will likely boost dollar demand from state
oil and gas company PT Pertamina, one of the main dollar buyers
in the local foreign exchange market, dealers said. Pertamina
needs dollars to pay for its oil imports.

"The underlying sentiment for the rupiah will remain bearish
ahead of the presidential runoff in September," said a trader at
a foreign bank.

Dealers expect the dollar to trade between 9,250 and 9,325
Wednesday. -- JP