Profit taking predicted to dominate Jakarta shares
<p>Profit taking predicted to dominate Jakarta shares</p><p> JAKARTA (JP): The rupiah is likely to remain steady this week
but local share prices are expected to bounce off their highs on
profit taking following last week's strong gains, analysts said
over the weekend.</p><p>They said market sentiment would likely remain good this week
as international money would start flowing in, which would
possibly give a boost to the beleaguered rupiah.</p><p>Currency dealers said the rupiah could strengthen further if
state banks continued to support the currency like they did last
week.</p><p>A dealer with a local private bank said if the rupiah shot to
the 12,000 level against the U.S. dollar this week and stayed at
there for a while, it would indicate stability and the tendency
would be for the currency to strengthen, possibly to 10,000 over
the next few weeks.</p><p>"But if the rupiah weakens again to the 14,000 level, it would
show that the strengthening of the rupiah these past few days was
only technical, that is due to intervention, and it would be
difficult to bring it even to the 12,000 level in the short run,
unless the government intervenes in the market again."</p><p>The rupiah closed last week at 13,350 to the dollar, or some
9.5 percent stronger than the Rp 14,700 to the dollar the week
before.</p><p>Nevertheless, dealers said, the movement of the Japanese yen
and regional currencies would also affect the fate of the rupiah,
which had suffered the largest depreciation among regional
currencies.</p><p>Technically, however, the rupiah should stay relatively strong
because, unlike previous weeks, local banks have become dollars
sellers as the central bank has promised to back them up any time
they need foreign exchange, he said.</p><p>Previously, domestic banks in search of U.S. dollar funding
were forced to buy the greenback on the spot market due to a lack
of credit lines to offshore banks.</p><p>In addition, they said, the market in general was anticipating
the strengthening of the rupiah because of more incoming foreign
aid.</p><p>The disbursement of foreign loans, however, will not stimulate
firm buying on the Jakarta Stock Exchange (JSX) because the
market recorded too many big gains during the last two weeks,
analysts said.</p><p>The JSX Composite Index closed last week 4.9 percent, or
22.654 points, higher at 486.234 over the week.</p><p>Daily turnover for the week averaged 402.62 million shares
worth $33.94 million, compared to the average of 255.25 million
shares valued at $22.8 million the previous week.</p><p>Socgen-Crosby Indonesia' head of research Goei Siauw Hong
predicted that the market would make a slight rally in the
beginning of the week but then would start to decline.</p><p>"So much good news has come in and the market will still be
happy in the beginning of the week before a correction sets in,"
Hong said.</p><p>Stimulus</p><p> He said the market was now waiting for real economic stimulus
from the government to stop the contraction in production and
revive economic activities.</p><p>"The market is looking forward to real economic policies, not
only social safety net programs," he said.</p><p>Bahana Securities' associate director and head of equity sales
Andre Cita agreed that profit taking would rule the market this
week.</p><p>However, Cita predicted that foreign investors would continue
buying after a relatively long pause following massive rioting in
Jakarta and other cities in May.</p><p>"I would expect the market to have few points here and there
of some profit taking, But I would also expect to see some more
foreign participation," he said.</p><p>He noted that some stocks, especially of those dollar earners,
would seem relatively cheap in dollar terms, compared to their
precrisis prices.</p><p>"So they would have to be very, very attractive in this point
of time to some foreign investors."</p><p>He said a stable rupiah, a stable social situation and, more
importantly, privatizations would continue to influence the
direction of the market in the near term.</p><p>Vickers Ballas Tamara' head of research Noraya Soewarno said
the issue of privatization of listed state banks would always
spark some speculative interest among domestic investors.</p><p>"If more positive news about the privatization of state firms
is coming, I expect more buying on those stocks will set in," she
said.</p><p>State cementmaker PT Semen Gresik and state mining firm PT
Aneka Tambang became the targets of speculative buying during the
last few weeks due to the government's privatization plans for
the firms.</p><p>Semen Gresik gained Rp 750 to close last week at Rp 12,050
from the previous week's close of Rp 11,300. Aneka Tambang rose
Rp 425 to Rp 2,475 from Rp 2,050.</p><p>Heavyweight state telephone monopoly PT Telkom closed trade
last week at Rp 4,625, compared to the previous week's close of
Rp 4,350. State-owned satellite operator PT Indosat closed at Rp
16,200, compared to the previous week's high of Rp 17,800.</p><p>Cigarette giant PT Gudang Garam closed the week at Rp 8,400
from the previous week's close of Rp 8,450. Competitor PT HM
Sampoerna gained Rp 125 to Rp 2,625, compared to the previous
week's close of 2,275. (rid)</p>
but local share prices are expected to bounce off their highs on
profit taking following last week's strong gains, analysts said
over the weekend.</p><p>They said market sentiment would likely remain good this week
as international money would start flowing in, which would
possibly give a boost to the beleaguered rupiah.</p><p>Currency dealers said the rupiah could strengthen further if
state banks continued to support the currency like they did last
week.</p><p>A dealer with a local private bank said if the rupiah shot to
the 12,000 level against the U.S. dollar this week and stayed at
there for a while, it would indicate stability and the tendency
would be for the currency to strengthen, possibly to 10,000 over
the next few weeks.</p><p>"But if the rupiah weakens again to the 14,000 level, it would
show that the strengthening of the rupiah these past few days was
only technical, that is due to intervention, and it would be
difficult to bring it even to the 12,000 level in the short run,
unless the government intervenes in the market again."</p><p>The rupiah closed last week at 13,350 to the dollar, or some
9.5 percent stronger than the Rp 14,700 to the dollar the week
before.</p><p>Nevertheless, dealers said, the movement of the Japanese yen
and regional currencies would also affect the fate of the rupiah,
which had suffered the largest depreciation among regional
currencies.</p><p>Technically, however, the rupiah should stay relatively strong
because, unlike previous weeks, local banks have become dollars
sellers as the central bank has promised to back them up any time
they need foreign exchange, he said.</p><p>Previously, domestic banks in search of U.S. dollar funding
were forced to buy the greenback on the spot market due to a lack
of credit lines to offshore banks.</p><p>In addition, they said, the market in general was anticipating
the strengthening of the rupiah because of more incoming foreign
aid.</p><p>The disbursement of foreign loans, however, will not stimulate
firm buying on the Jakarta Stock Exchange (JSX) because the
market recorded too many big gains during the last two weeks,
analysts said.</p><p>The JSX Composite Index closed last week 4.9 percent, or
22.654 points, higher at 486.234 over the week.</p><p>Daily turnover for the week averaged 402.62 million shares
worth $33.94 million, compared to the average of 255.25 million
shares valued at $22.8 million the previous week.</p><p>Socgen-Crosby Indonesia' head of research Goei Siauw Hong
predicted that the market would make a slight rally in the
beginning of the week but then would start to decline.</p><p>"So much good news has come in and the market will still be
happy in the beginning of the week before a correction sets in,"
Hong said.</p><p>Stimulus</p><p> He said the market was now waiting for real economic stimulus
from the government to stop the contraction in production and
revive economic activities.</p><p>"The market is looking forward to real economic policies, not
only social safety net programs," he said.</p><p>Bahana Securities' associate director and head of equity sales
Andre Cita agreed that profit taking would rule the market this
week.</p><p>However, Cita predicted that foreign investors would continue
buying after a relatively long pause following massive rioting in
Jakarta and other cities in May.</p><p>"I would expect the market to have few points here and there
of some profit taking, But I would also expect to see some more
foreign participation," he said.</p><p>He noted that some stocks, especially of those dollar earners,
would seem relatively cheap in dollar terms, compared to their
precrisis prices.</p><p>"So they would have to be very, very attractive in this point
of time to some foreign investors."</p><p>He said a stable rupiah, a stable social situation and, more
importantly, privatizations would continue to influence the
direction of the market in the near term.</p><p>Vickers Ballas Tamara' head of research Noraya Soewarno said
the issue of privatization of listed state banks would always
spark some speculative interest among domestic investors.</p><p>"If more positive news about the privatization of state firms
is coming, I expect more buying on those stocks will set in," she
said.</p><p>State cementmaker PT Semen Gresik and state mining firm PT
Aneka Tambang became the targets of speculative buying during the
last few weeks due to the government's privatization plans for
the firms.</p><p>Semen Gresik gained Rp 750 to close last week at Rp 12,050
from the previous week's close of Rp 11,300. Aneka Tambang rose
Rp 425 to Rp 2,475 from Rp 2,050.</p><p>Heavyweight state telephone monopoly PT Telkom closed trade
last week at Rp 4,625, compared to the previous week's close of
Rp 4,350. State-owned satellite operator PT Indosat closed at Rp
16,200, compared to the previous week's high of Rp 17,800.</p><p>Cigarette giant PT Gudang Garam closed the week at Rp 8,400
from the previous week's close of Rp 8,450. Competitor PT HM
Sampoerna gained Rp 125 to Rp 2,625, compared to the previous
week's close of 2,275. (rid)</p>