RI stocks seen headed for correction

RI stocks seen headed for correction

Agence France-Presse Jakarta/Singapore

Indonesia's stock market is due for a correction in this week after rising a heady 3.7 percent last week, analysts said over the weekend.

"I think the market is probably is running ahead of its fundamentals, so it will probably consolidate next week in the short term," said David Chang, a director at Paramitra Alfa Sekuritas.

The Jakarta Stock Exchange composite index closed on Friday at 704.498, finishing above the key 700 points level for the first time in four years, and up 25.191 points or 3.7 percent on the previous week's close.

Average daily volume was 1.79 billion shares worth Rp 754.79 billion (US$89.3 million) compared to 1.96 billion shares worth Rp 850.28 billion the previous week.

Chang said he expected blue chips such as Telkom, Indofood, Astra and Indosat to lead the correction.

Eficorp Securities analyst Fordyanto Widjaja also said the market had entered overbought territory since last week and should face a minor correction this week.

Meanwhile in Singapore, the share prices should breach the 1,800-point level as the upward momentum continues on the strength of an accelerating economy.

The Straits Times Index rose for the sixth straight session on Friday to close at 1,791.35, up 61.12 points, or 3.53 percent, from the previous week.

"Investors are now coming in to build new positions as they are optimistic about the prospects for this year," a dealer with a local brokerage said, adding that "the momentum should continue."

The dealer said once the benchmark index barrels through 1,800, the next target would be 2,000.

Prime Minister Goh Chok Tong said gross domestic product (GDP) should expand 3.0-5.0 percent this year, from only a 0.8 percent growth in 2003 because of the impact of the Severe Acute Respiratory Syndrome (SARS) epidemic.

Over the past week, average daily volume in the three and a half days of trading totaled 909.08 million shares valued at S$648.91 million ($382 million), compared with 347.09 million shares worth S$283.45 million the previous week.

In Seoul, Korean share prices are likely to see a slow week as investors await quarterly earnings data from the United States for a fresh lead on the global economic and corporate outlook, according to dealers.

The options expire on Thursday will add a technical note to trade, while the sharp gains seen over the past week will likely limit the room for a further advance.

The market rose 4.1 percent over the week to close at 821.26 points on Friday on the back of solid gains in the U.S. markets and expectations of economic recovery in the new year.

Average trade volume of the week was 317 million shares worth 1.8 trillion won ($1.5 billion), reflecting the quieter trade seen in a holiday-shortened week.

Korea Investment Securities analyst Shin Dong-Seong said the market might be in for a correction this week ahead of Thursday's options expire.

In Kuala Lumpu, Malaysian share prices are poised to strengthen as more investors return from holidays after the stock market started the first trading day of 2004 with a whimper, analysts said over the weekend.

Victor Wan, senior analyst with Mercury Securities, said the market exited 2003 respectably with the key index gaining 22 percent over the year to close at its highest level in two years. But investors were quick to lock in profits on Friday to mark the start of the new year, causing the index to fall 0.70 percent, he said.

"Despite Friday's weakness, the base-building process is still intact and with more investors returning from their holidays, market activity is poised to pick up especially with the Lunar New Year just around the corner," he said.

The Kuala Lumpur Stock Exchange composite index rose 8.47 points, or 1.1 percent, in the past week to close on Friday at 788.49 points.