MPR sessions 'to dictate' Jakarta stock trading

MPR sessions 'to dictate' Jakarta stock trading

JAKARTA (JP): Experts agree trading on the Jakarta Stock
Exchange (JSX) this week will very much depend on the course of
the General Session of the People's Consultative Assembly (MPR).

Stock analysts said there could be a correction to the index,
which gained over 9 percent last week, if the session did not
proceed smoothly.

Jasso Winarto, a senior securities analyst, said last week's
big gains -- particularly on the last two days of the week --
were attributable to investors' initial optimism that the General
Session would not hit any snags.

"The index will experience a 3 to 4 percent correction early
this week if investors find that the MPR session is not going as
smoothly as they previously expected," Jasso said.

He said investors, about 70 percent of which were local, were
too active last Friday after the first day of the General Session
proceeded peacefully.

Investors are hopeful the MPR session will continue to proceed
smoothly toward the election of the country's next president and
the endorsement of the 1999-2004 State Policy Guidelines.

Faction leaders in Indonesia's national assembly agreed to
move forward the presidential election to Oct. 20, Golkar Party
chairman Akbar Tanjung said on Saturday.

Akbar said the new president was expected to be elected on
Oct. 20 and the vice president the following day.

Analysts said the agreement was an encouraging signal that the
MPR would be able to complete the General Session successfully
and avoid a presidential election deadlock.

The current session, scheduled to end on Oct. 3, will
establish the rules and procedures for the General Session and
elect the chairman and vice chairmen of the legislature.

A working committee of the MPR will prepare the broad state
policy guidelines for the next five years and the necessary MPR
decrees between Oct. 5 and Oct. 14.

Incumbent President B.J. Habibie will give his accountability
speech to the MPR on Oct. 14, Akbar said.

Habibie and Indonesian Democratic Party of Struggle (PDI
Perjuangan) chairwoman Megawati Soekarnoputri, the daughter of
founding president Sukarno, are the front-runners in the
presidential race.

Jasso said he was not yet sure the General Session would
continue to go smoothly.

"It is not impossible that the Assembly session will be filled
with excessively long discussions that cover only trivial
subjects," he said, adding that such a development would weigh on
investors' confidence.

The result of the early part of the session will be reflected
in the index at the end of this week, he said.

"The index will be high at the end of the week if the market
really sees indications that the Assembly session will continue
to go smoothly," he said, adding that other factors, including
the country's economic fundamentals, would support the market.

He said the country was seeing low inflation, stable economic
growth and a strengthening of the rupiah.

An analyst with a state-owned securities house said all the
positive economic fundamentals and the large number of investors
waiting on the sidelines would not be enough to move the index up
if the country's political situation was not favorable.

He agreed with Jasso that the index could go down early this
week on the country's political situation, but it would not
breach the 500 level even in a worst-case scenario.

"We have a very strong support level somewhere between 500
points and 525 points," he said.

Investors immediately enter the market every time the index
touches anywhere below 525 points, he said.

He also said any market correction would mostly weigh on big
cap stocks, which made noticeable gains over the past two weeks.

The JSX Composite Index jumped 9.37 percent to 566.04 points
last week from 517.54 points the previous week.

Average daily turnover last week was some 482 million shares,
compared to 413 million shares the previous week.

The average daily transaction value increased significantly to
Rp 559 billion from Rp 388 billion the previous week, due mainly
to active trading on the last two days of the week

Last week's top gainers were PT Putra Surya Multidana, rising
100 percent, PT Sekar Laut, which went up 80 percent, and PT
Multibreeder Adirama Indonesia, which ended the week 75 percent
higher.

The top losers on the week were PT Aneka Kimia Raya with a 20
percent drop, PT Sumi Indo Kabel, which took a 16 percent tumble,
and PT Wahana Jaya Perkasa, which fell by 15.79 percent on the
week.

The top brokerage firms by transaction value were PT Vickers
Ballas Tamara with Rp 477.7 billion, PT Danareksa Sekuritas with
Rp 293.9 billion and PT Credit Lyonnais Capital Indonesia, which
did Rp 266.9 billion in business.

Meanwhile, the rupiah closed at 7,970 against the U.S. dollar
last week, a leap from its 8,765 close the previous week. (udi)