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)