Rally continues for second day on JSX

Rally continues for second day on JSX

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
rallied for the second consecutive day yesterday on cuts in local
banks' deposit rates.

Brokers said the move to cut rates of one-month deposits only
one day after banks significantly increased them to more than 50
percent per annum drew a positive response from the market.

Many investors put their cash back into blue-chip shares,
fueling a buying spree from the opening of the market until its
close, the brokers said.

Securities analysts, meanwhile, said the improved trading
activities also resulted from new optimism about the handling of
the overseas private debt problem.

The JSX Composite Index closed sharply higher yesterday by 5.7
percent -- 28.71 points -- at 532.81 points.

Around 1.05 billion shares changed hands on the regular market
valued at Rp 1.2 trillion.

But the main factor in the buying spree was the cut in the
deposit rates, analysts said.

State PT Bank Dagang Negara (BDN) cut its one-month time
deposit to 47.5 percent from 67.5 percent the day before. The
country's listed Bank Negara Indonesia reduced its deposit to
47.5 percent from 55 percent the day before.

"The cut in the interest rate in the domestic banking system
has lured most investors to invest their funds in the local
exchange," a broker from Trimegah Securities said.

Stockbrokers said positive news that banks from Japan, the
United States and Europe would likely agree to reschedule the
country's private corporate debt also revived the investors's
confidence in the battered economy.

Japanese daily Nihon Keizai Shimbun reported Wednesday that 13
banks from international creditors were close to reaching a final
conclusion on solving the country's mounting corporate debts
crisis and postponing the repayment of the principal for six
months.

An analyst with Harita Securities, Christina Lim, said
foreign investors were confident over the long-term prospects of
the country's economy. This prompted them to make bulk buying
orders in most big capitalized stocks like PT Telkom, Indosat,
Tambang Timah, HM Sampoerna and Gudang Garam yesterday.

A broker with BZW Niaga Securities said most foreign brokerage
houses, such as Merrill Lynch, Jardine Fleming Nusantara, Credit
Lyonnais Securities, Asia Equities Securities, ING Barings and
Indosuez WICarr Securities, were extremely active for the whole
trading day.

"Trading activities are great, with a lot of transactions in
the local exchange," the broker said.

"Most foreign brokerage houses were net buyers and made bulk
buying orders."

An analyst with Pentasena Securities said the huge foreign
buying stemmed from anticipation that the government and the IMF
would secure a win-win agreement in the coming weeks.

Most blue-chip stocks ended higher yesterday. PT
Telekomunikasi Indonesia (Telkom) rose by Rp 225 to Rp 4,050 on
24.83 million shares changing hands, automaker Astra
International by Rp 575 to Rp 2,475 on 64.04 million shares,
Indosat by Rp 550 to Rp 12,750 on 259,500 shares, Tambang Timah
by Rp 150 to Rp 7,050 on 2.85 million shares, Sampoerna by Rp
1,350 to Rp 8,125 on 6.68 million shares traded and Gudang Garam
by Rp 775 to Rp 11,850 on 3.40 million shares.

As stock prices surged, the rupiah ended slightly lower
yesterday in the currency market.

It closed at 8,550 against the U.S. dollar in moderate
trading, down from the previous day's close of 8,300. (aly)