Politically related stocks remain preferable: Brokers
JAKARTA (JP): Local stock prices continued to make mild gains yesterday in moderate trading, with local investors still favoring politically connected stocks, stockbrokers said.
The Jakarta Stock Exchange (JSX) Composite Index rose 0.2 percent to 512.14 points from 510.78 the previous day, with trading volume reaching 682.39 million shares worth Rp 524.36 billion (US$52.43 million).
"There was nothing special in the market except that local investors continued to buy selective stocks related to high profile business groups," a dealer with joint venture securities said.
He was referring to Citra Marga Nusaphala Persada, Astra Internasional and Bimantara Citra and Bhakti Investama which were actively traded by local investors and continued to make gains.
Toll road builder Citra Marga, controlled by President Soeharto's eldest daughter Siti Hardijanti Rukmana, who is also Minister of Social Affairs, rose from Rp 25 to Rp 600.
Astra Internasional, where Soeharto's close confidant Muhammad (Bob) Hasan, who is also Minister of Industry and Trade, has significant stakes, rose from Rp 75 to Rp 1,900
Bhakti Investama, controlled by Soeharto's daughter Siti Hediati Prabowo, rose from Rp 200 to Rp 1,500, and conglomerate Bimantara Citra, owned by Soeharto's son Bambang Trihatmodjo, remained unchanged at Rp 1,025.
Brokers said local security houses like Danareksa Sekuritas, Lippo Securities and Bhakti Investama were making quite large buying orders for the stocks, causing the benchmark price index to rise marginally higher in late trading yesterday.
They said foreign investors were still on the sidelines, waiting for the government's new measures to shore up the rupiah's value and revive the country's crippled economy.
"The market was a bit disappointed by the fact that the government did not announce any measures following the first meeting of the new cabinet," an analyst with Mashill Jaya Securities said.
He added that the market had expected the government would have decided on its controversial plan to adopt the currency board system, which would peg the rupiah to the U.S. dollar.
Coordinating Minister for Economy and Finance Ginandjar Kartasasmita said yesterday the government had not decided whether to peg the embattled rupiah.
The government had wanted to peg the rupiah at between Rp 5,000 and Rp 6,000 to the dollar in a bid to stabilize the currency, whose 70 percent fall since last July has wreaked havoc on the country's economy.
But Ginandjar said the peg was one alternative among the options for staging an economic recovery.
The indecisiveness over the currency board issue also made the rupiah weaken slightly against the U.S. dollar, currency dealers said.
The rupiah was trapped in range transactions at the Rp 10,000 level.
Spot rupiah closed at Rp 10,300 against the American dollar in moderate trading, lower than its close at Rp 10,200 the previous day.
"Most operators did not want to open any new position amid the uncertainties, especially when the government has not decided on what steps (will be taken) to help the beleaguered rupiah," a local private bank chief dealer said.
He said the market expected the government to unveil measures this week to overcome the economic crisis. (aly)