Positive market sentiments still loom

Positive market sentiments still loom

Dadan Wijaksana, The Jakarta Post, Jakarta

With positive sentiments still looming in the market, the
movement of the Jakarta Composite Index will be relatively stable
this week and will hover at a thin range, according to analysts.

Unlike last week's trading, buying actions on blue chips
shares are expected to be less active throughout the week,
increasing chances that the index may experience a slight
correction.

Despite there being only four days of trading last week, the
index managed to climb sharply on the back of a foreigner-led
buying spree on the market's top shares.

The index rallied to a close higher for a third consecutive
week to close at 459.38 points, higher than 449.38 points the
week before.

"The index will stabilize this week, although we cannot rule
out the possibility of the index going down a bit," stock analyst
Dandossi Matram said over the weekend.

Dandossi attributed the upward movement of the index to the
government's ability to maintain the market's positive
atmosphere, gradually reducing the political and security risks
for the market.

The relatively stable environment has managed to prevent
foreign investors, who have been the main cause of recent index
movement, from fleeing.

Zulfikar, stock analyst of Mandiri Sekuritas, was also of the
opinion that there would not be a sharp change in the index for
this week, either upward or downward.

"There is still going to be buying action on blue chips, but
overall, the index will not change much" he said.

Zulfikar also brushed aside the negative impact of the planned
pullout of the biggest U.S. pension fund from four Southeast
Asian markets, including Indonesia, saying the firm had only
invested small amounts in the country.

On Thursday, the California Public Employees' Retirement
System (Calpers) blacklisted Indonesia, Thailand, Malaysia and
the Philippines, claiming the countries did not meet its new
investment criteria, including human rights and labor practices.

Calpers have included social issues such as human rights,
transparency, social stability and labor laws in its investment
guidelines, aside from financial factors.

While the announcement had only a minor impact in Malaysia and
the Philippines, Indonesia, by and large, ignored the news for
most of the session. Thailand shares were hit the hardest but
mostly due to profit-taking rather than uncertainty.

Although the company has an investment portfolio worth US$150
billion worldwide, investment in each of the four countries only
stands at less than $100 million.

In the currency market, Calpers' move also had an
insignificant effect on the rupiah, as foreign exchange markets
in Jakarta showed little reaction to the news.

The rupiah ended Rp 10,180 against the dollar, up from Rp
10,245 the previous week.

Currency analyst Wiwan Widjaja believed that, for now,
internal factors would pose a bigger threat to the local currency
than external ones.

"Rupiah movement will not be too far away from previous weeks,
stable with a tendency to strengthen slightly," he said.

The positive trend would continue this week because there is
little sign of negative market sentiments, he went on.

While it is inevitable that there will be a high dollar demand
from domestic companies repaying their maturing debts, dollar
selling by the Indonesian Bank Restructuring Agency (IBRA) will
offset the losses.

Wiwan added that Bank Central Asia's disposal progress would
be watched closely as it is nearing its end.

With all those arguments, Wiwan predicted the rupiah would be
hovering between Rp 10,150 and Rp 10,250 against the dollar.