Most blue chip shares lose ground in JSX
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)