Quiet trading likely on local mart
JAKARTA (JP): The local stock exchange will see quiet trading this week as most potential investors had already left the market for their year-end holiday, analysts said.
The analysts said that window dressing activities, which usually take place during the year-end, would likely be less active than previous years.
"Window dressing operations will only be active if the country's economic and political situation is still normal," one analyst at a local securities firm said on Saturday.
"The gloomy outlook of the country's political and economic conditions has discouraged all sorts of trading activities, including the window dressing," he said.
Analysts earlier estimated that many fund managers would carry out year-end window dressing operations as part of their strategy to improve the performance of their overall equity portfolio.
Head of research at BNI Securities Adrian Rusmana said that Indonesia's unresolved political and economic crises had posed a huge obstacle to most investors putting funds in the battered local bourse.
Moreover, he said, foreign investors had not seen any clear- cut measures by President Habibie's transitional administration to properly address the problems.
"Investors are only mesmerized if there is political and security stability," he said.
The country has been rocked over the past few months by persistent daily antigovernment protests in the capital demanding the current government introduce measures to alleviate its worst crisis in decades and prosecute former president Soeharto for his alleged abuse of political and economic power during his 32 years in power.
An analyst with Mashill Jaya Securities, Edhi Widjojo, said that most offshore fund managers would only re-enter the local market if they saw a serious commitment by the government to end the crises.
Foreign fund managers have mostly fled the country since bloody riots hit the country in May, killing hundreds of people and forcing former president Soeharto to step down.
The daily trading volume in the local bourse has significantly declined to 180 million shares from 380 million shares before the economic crisis hit the country in July of last year.
"The absence of foreign investors should be blamed for the lethargic trading," Vonny Juwono, a sale broker with Trimegah Securindolestari, said on Friday.
She said that the benchmark price index was expected to fall below the 400-point key level this week as there were no more incentives left for investors to make new purchases.
"At least the index will hit its support level of 390 points this week," she predicted.
The Jakarta Stock Exchange (JSX) fell to 403.96 last week from 405.59 the previous week.
Daily average turnover also dropped by 4.1 percent to just 235 million shares changing hands against 245.20 million shares the previous week.
Daily average transaction value, however, rose 21 percent to Rp 269.74 billion last week compared to Rp 222.43 billion the previous week.
Financial analysts said that trading activities on the currency market would remain quiet this week due to the absence of fresh leads, since most market participants are on their year- end holiday.
They said that the rupiah, which closed 3 percent lower at 7,750 last week compared to its close of 7,500 the previous week, should range between 7,400 and 8,000 this week.
"Even if there are still trading activities, the volume will be very limited," a chief dealer with a local private bank said.
Financial analysts said, though, that the rupiah's fate had shrugged off the negative impact of persistent antigovernment protests in the past few days, but unresolved political and social concerns still hinder its mid-term and long-term prospects. (aly)