Rupiah stable but stocks fall 4.5 percent on JSX

Rupiah stable but stocks fall 4.5 percent on JSX

JAKARTA (JP): The rupiah escaped the regional currency slump
yesterday, rising to 11,650 against the U.S. dollar on positive
market response to the government's latest measures to invigorate
the country's ailing banking system.

But stock prices on the Jakarta Stock Exchange (JSX) followed
the regional trend, falling 4.58 percent.

Currency dealers said the market was buoyed by the
government's move to suspend the operation of three banks and to
nationalize another four banks last week.

They said the market felt comfortable with the government's
latest moves as there were no reports of massive runs by
depositors on the troubled banks.

"The market perceived that the government is serious in
revitalizing the country's banking sector, and this triggered
positive sentiment," a chief dealer with a local private bank
said.

The rupiah's attempt to rise, however, was impeded by market's
worries over the fall of regional currencies yesterday,
especially the Japanese yen.

"Though sentiment on the rupiah looks positive, worries over a
decline in the Japanese yen prevented it from strengthening
further against the American dollar," he said.

A dealer at another private bank said the absence of fresh
reports of social unrest would provide more leeway for the rupiah
to gain ground in the coming days.

"The rupiah is expected to head to the 11,000 level in the
coming days," the dealer said.

But stock prices on JSX continued to decline, with the main
composite index falling 17.80 points to close at 370.54
yesterday.

Total turnover was 149.36 million shares valued at Rp 208.58
billion (US$17.9 billion) changing hands on the regular market.

Stock brokers attributed yesterday's intraday sharp decline,
not seen since January this year, to the market's negative
response to the government' backtracking on its privatization
plan for state enterprises.

"All stocks of state enterprises were under heavy selling
pressure," a broker with Trimegah Securindo Lestari said.

The government has said that it would maintain its controlling
stake in the country's largest cementmaker PT Semen Gresik
following objections from the West Sumatran community against
foreign majority ownership of PT Semen Padang, a wholly owned
subsidiary of Semen Gresik.

Tanri acknowledged yesterday that the withdrawal from the
earlier scenario was a "setback" for the privatization of Semen
Gresik but it was needed to expedite the overall privatization
program of 12 state firms this fiscal year.

Brokers said investors, especially foreign ones, felt
discouraged about placing funds here after learning that the
government would only divest around 14 percent of its stake in
Semen Gresik, instead of 35 percent as previously planned.

An analyst with Harita Kencana Securities, Karman
Pamurahardjo, said that investors who had made large selling
orders due to a lack of positive news on the hammered local
bourse continued to put in large selling orders yesterday,
causing the main price gauge to dive down further.

"Besides, some investors have even switched to money market
instruments," he said pointing out that many investors were
moving their investments to Bank Indonesia's one-month papers
which offer a rate of 70 percent per annum.

Semen Gresik slid Rp 725 to Rp 6,050 on 3.54 million shares
traded, state general mining firm PT Aneka Tambang fell 175 to Rp
1,750 on 17.18 million shares, and state tin miner PT Tambang
Timah dropped Rp 125 to Rp 6,275 on 465,500 shares.

Market leader state-owned domestic telephone provider PT
Telkom, shed Rp 150 to Rp 2,800 on 2.76 million, and state-owned
international call operator PT Indosat fell Rp 575 to Rp 9,400 on
326,500 shares. (aly)