Quiet trading likely on JSX this week
JAKARTA (JP): Share trading on the Jakarta Stock Exchange (JSX) is likely to be quiet again this week on speculations of a possible hike in the U.S. interest rate and lack of fresh news on the domestic side.
The tension between the United States and Iraq could become another reason to further emphasize the market's wait-and-see attitude, analysts said.
Some analysts contacted by The Jakarta Post viewed that fears on the possible hike in U.S. interest rates have been in the market over the past two weeks but the stronger U.S. jobs data released last Friday is likely to intensify the fears.
The analysts also viewed that the U.S. missile attacks on Iraq early last week should have caused no direct impact to Indonesia's economy but the domination of global investors on the market gives a massage that any development in the Iraq-U.S. conflict will affect the JSX's performance to a certain extent.
Those analysts also observed that in addition to worries on the possible hike of U.S. interest rates and the tension in the Middle East, the JSX actually has its own reasons for continuously being sluggish in the next few weeks.
"We do not expect any big news, both positive or negative, to come next week. So, we may see quiet activities for another few weeks," the president of the London-based BZW Niaga Securities, Steven Kenny, told the Post over the weekend.
Kenny particularly noted that the return of some fund managers from a few weeks of holidays failed to boost the market's activities.
"What I know, funds allocated for Indonesia are very limited," a senior manager of the Japanese-based ADS Securities, Ikeda, told the Post.
Ikeda also estimated that the market still lacks support to make a rebound although the prices have already gone down.
Kenny and Ikeda shared the opinion that the market may rebound but not at the moment because investors, both foreign and domestic, are still cautious to buy shares.
"It's too boring to stay in the market and we have yet to see any signal of a recovery," a senior dealer said.
The dealer pointed out that while keeping a close look at U.S. interest rate trends, investors also need more time to understand the latest move of the Lippo Group.
Fears of a U.S. interest rate hike renewed late last week when the Labor Department announced long-awaited U.S. employment data, showing that the economy created 250,000 new nonfarm jobs in August, against the revised 228,000 in July.
The U.S. jobless rate slumped to a seven-year low of 5.1 percent in August from 5.4 percent in July.
"The (jobs) numbers lead us to think that the Federal Reserve will probably move in this September, raising rates by 25 basis points," a Wall Street analyst was quoted by Reuters as saying.
Economists generally had expected nonfarm payrolls to rise by an average of 224,000 in August and the unemployment rate to edge lower, to 5.3 percent.
The board of the Federal Reserve's Open Market Committee will meet on Sept. 24.
Lippo
Last week, stock prices on the JSX continued to decline by another 0.7 percent with its benchmark composite index decreasing by 3.85 points to close the week at 543.75 points.
Total trading value stood at Rp 1.1 trillion (US$466 million) last week, with 547 million shares changing hands. Foreign buy transactions amounted to Rp 714 billion against sell transactions of Rp 694 trillion.
Dealers said that investors turned their attention on the Lippo Group's move to restructure its financial division.
Two stocks of the Lippo Group -- Lippo Securities and Lippo Life Insurance -- continued to record large transactions but failed to rebound.
The two stocks booked a total transactions value of Rp 45.8 billion and Rp 53 billion respectively, with trading volumes of 33 million shares and 26.7 million shares.
Lippo Securities share price dropped further by Rp 75, to Rp 1,350 at last week's close, while Lippo Life slumped by Rp 50, to Rp 1,950.
"The market was still wondering what is the motive behind the Lippo Group's major move," a dealer told the Post.
Lippo Securities recently announced a plan to acquire another 27 percent stake in Lippo Life, while Lippo Life proposed to gain a controlling stake in Lippo Bank.
Meanwhile, the share price of the operator of the Hyatt Regency hotel in Surabaya, East Java, Bumi Modern Hyatt, which posted a net deficit of Rp 31 billion in the last two years, rose 60 percent to close at Rp 1,125 on the rumor that a new investor has proposed to take control of the company.
Bumi Modern Hyatt has confirmed the rumor but contended that the proposed transaction has not been closed yet.
Last week's top 10 most-traded stocks in value other than Lippo Securities and Lippo Life were Astra International (with a trading value of Rp 71 billion), Bakrie & Brothers (Rp 56 billion), PSP (Rp 47 billion), Telkom (Rp 45 billion), Gudang Garam (Rp 36 billion), Semen Gresik (Rp 34 billion), HM Sampoerna (Rp 33 billion) and Berlian Laju Tenker (Rp 32 billion). (alo)