Presidential poll, court 'fatwa' to weigh on JSX

JAKARTA (JP): The country's presidential election and the release of the Supreme Court's legal opinion on the Bank Bali scandal will weigh significantly on the Jakarta Stock Exchange (JSX) this week.

Securities analysts said over the weekend most investors would still take a wait-and-see attitude until the People's Consultative Assembly (MPR) elected a new president on Wednesday.

But if the Supreme Court issued a legal opinion in favor of public demand to fully disclose the audit report on the Bank Bali scandal before the presidential election, the market sentiment would improve much earlier, they said.

Hendra H. Kustarjo, an analyst at PT Panin Sekuritas, said that the election of the new president would determine the future direction of share prices.

"All the market wants is a change. If Habibie is elected, a selling pressure might hit the market," he said. "But if the MPR elects Megawati Soekarnoputri or some other candidate rather than Habibie, the market sentiment would improve," he added.

Habibie, who gave his accountability report before the MPR on Thursday night, will hear the final result on Tuesday of whether the MPR accepts the report.

Budi Ruseno, an analyst with PT Bhakti Investama, said that he was concerned that if the MPR accepted the speech it would extend the investors' currently held wait-and-see attitude at least until the presidential election.

Budi said that the presidential candidates liked by the market were those who were free from corruption, collusion and nepotism.

"Gus Dur (National Awakening Party's founder, also known as Abdurrahman Wahid) and Megawati (Indonesian Democratic Party of Struggle chairwoman) are okay for the market but anybody else beyond those two and Habibie is best for the market," he said.

Hendra and Budi shared the opinion that investors still took the Bank Bali scandal as their investment consideration for the equity market. Thus, any progress toward the resolution of the scandal would create positive sentiments for JSX.

"If there is an indication that the resolution of the Bank Bali scandal is progressing, the market would react quickly and positively," Hendra said.

A government source said that the Supreme Court would release its legal opinion, also known as a fatwa, this week, on whether the Supreme Audit Agency (BPK) should submit the full audit report to the House of Representatives.

The source said that the content of the fatwa was in favor of the people's aspiration.

The BPK only disclosed the short version of an audit report by PricewaterhouseCoopers (PwC) because releasing the full report would violate the country's banking secrecy code.

The Bank Bali scandal revolves around the transfer of Rp 546 billion (US$80 million) from Bank Bali to PT Era Giat Prima (EGP) as a commission for helping the bank recoup Rp 904 billion in interbank loans to closed banks. EGP is run by two businessmen connected to the Golkar Party, which has made Habibie its presidential candidate.

Bank Bali should not have used the services of EGP because the interbank loans were covered by the government's blanket guarantee program.

There have been allegations that the inner circle of President Habibie was using EGP to raise money to finance Habibie's presidential candidacy bid.

Budi said that if the Bank Bali scandal full audit report were disclosed this week, prompted by the Supreme Court's fatwa, the market would indeed react positively.

"The market would see the future pleasantly on consideration that a new wave of openness has risen again," he said.

Budi said that the market was hoping that the Supreme Court helped the public's effort in having the audit report, which was conducted by foreign auditor PwC, fully disclosed by the BPK to the House of Representatives.

The BPK hired PwC in late August to audit the transactions relating to the Bank Bali scandal.

"The market could not wait until the full-length audit report be submitted to the House, which in turn would be disclosed to the public immediately," he said, adding that investors needed much more transparency out of the Bank Bali scandal so they could trade comfortably on the JSX.

The JSX Composite Index decreased 3.5 percent to 567.91 points last week from 588.23 points the previous week.

Average daily turnover last week was cut by half at 436.78 million shares, compared to 902.64 million shares the previous week.

Average daily transaction value decreased to Rp 442.08 billion from Rp 677 billion the previous week on political concerns.

Last week's top gainers were PT Tigaraksa Satria, up 25 percent, PT Alakasa Industrindo, which went up 20 percent, and PT Lippo Enterprises, which also went up 20 percent by end of the week.

The losers of the week were PT Indo Citra Finance with a 26.67 percent drop, PT Wahana Jaya Perkasa, which took a 25 percent tumble, and PT Putra Sejahtera Pioneerindo, which fell by 22.22 percent in the week.

The top brokerage firms by transaction value were PT Ciptamahardhika with Rp 961.9 billion, PT Danareksa Sekuritas with Rp 267.8 billion and PT HSBC Securities Indonesia, which did Rp 253 billion in business.

The rupiah closed at 8,050 against the U.S. dollar last week, compared to its 7,805 close the previous week. (udi)