Most blue chip shares lose ground in JSX
JAKARTA (JP): Stock trading at the Jakarta Stock Exchange (JSX) remained under selling pressure yesterday, with most blue chip shares losing ground in moderate trade, brokers said.
A stockbroker with BZW Niaga Securities said the government's announcement of March's higher-than-expected inflation rate and worsening economic indicators put the market into negative territory.
She said foreign brokerage firms like ING Barings, Indosuez WICarr, SBC Warburg and Credit Lyonnais placed large selling orders partly due to the bad news.
The Central Bureau of Statistics (BPS) announced yesterday that the inflation rate for March was 5.49 percent, bringing the inflation rate for the year's first three months to 25.13 percent, exceeding the government's annual target of 20 percent.
The government expects an inflation rate of about 45 percent in the 1998 calendar year, a big rise from last year's 11.05 percent.
"I think there will be more negative news coming to the market which will force most investors to sell heavily," the stockbroker said.
Research director at Mashill Jaya Securities Tjandra Kartika said the market had already anticipated negative news, but that the government announcement was worse than supposed.
"I think profit taking from last week's gains and weak regional markets were also to blame for the price falls," he said.
The JSX Composite Index closed 7.55 points lower at 516.40 points with a total turnover of 396.52 million shares on the regular market valued at Rp 516.40 billion (US$60.39 million) yesterday.
He said the economic crisis, which has seen the rupiah's value fall 70 percent against the U.S. dollar, had forced most corporations to the brink of collapse.
The securities analysts said the encouraging results of the International Monetary Fund's review of Indonesia's reform program should have improved trading activity.
"But the psychological impact of the government's reports on the country's worsening economic indicators prompted investors to sell their stocks," he said.
The government and the IMF are currently working on a fresh economic reform package with a conclusion expected to be announced soon this week.
Analysts said positive results from the talks would help investor confidence in the local market recover prompting them to reenter the market soon.
"The market is now waiting for the announcement of the disbursement of the second tranche," Mashill's Tjandra said.
The government is now waiting for the release of the second US$3 billion tranche which is part of the $43 billion IMF-led bailout package to improve the country's ailing economy.
The country received the first $3 billion tranche in October last year.
But stockbrokers said there were rumors yesterday that the IMF would not disburse the second tranche this month on allegations that Indonesia was not serious in implementing its economic reform program agreed to with the IMF last January.
"Or even if it is disbursed, the IMF will release only half of it," a broker with a joint-venture securities firm said.
As stock prices declined, the rupiah remained stable closing at 8,550 against the American dollar, almost unchanged from the previous day's close at 8,500. (aly)