Rupiah steady but stocks down on profit taking

JAKARTA (JP): The fluctuating rupiah held steady yesterday, but stock prices on the Jakarta Stock Exchange continued to decline on profit taking and regional weaknesses.

The rupiah traded at around 14,000 against the U.S. dollar throughout the day on a quiet market. The currency ended the day's trading at 14,000/200, unmoved from Tuesday's close of 14,000.

A dealer with a local private bank said the rupiah was supported by President B.J. Habibie's statement yesterday that he would initiate a law to end discrimination against Chinese- Indonesians.

"It's pretty quiet today. The jitters are over, and trading was very slow. Maybe it's because of the promise from President Habibie to end discrimination against ethnic Chinese here."

The market was jittery Monday following Habibie's comment in an interview with The Washington Post, in which he downplayed the need for Chinese-Indonesian businesspeople to return to the country.

Dealers said the market was awaiting results of the Consultative Group on Indonesia meeting in Paris at the end of this month and implementation of the Indonesian Debt Restructuring Agency.

"Indications so far are still positive. And we hope the impact on our currency will also be positive," a dealer with another local private bank said.

Stock prices were weighed down by the fall of other regional markets and mounting concerns over a possible rise in the U.S. interest rates, stockbrokers said.

They said the fall in regional markets was aggravated by U.S. Federal Reserve chairman Alan Greenspan's testimony before the U.S. Congress Tuesday, which raised fears of imminent interest rate increases.

The JSX Composite Index fell 1.1 percent or 5.18 points to 483.05 on a total turnover of 395.43 million shares valued at Rp 546.40 billion (US$39.02 million).

Stockbrokers said profit taking on some blue chip stocks like Telkom, Indosat and Tambang Timah, which account for around 30 percent of market capitalization in the local bourse, also pushed the benchmark price index to fall further yesterday after making gains over the past few days.

"Profit taking in some big-capitalization companies caused the index to fall," a broker with Mashill Jaya Securities said.

Telkom's shares slipped by Rp 175 to close at Rp 4,350 on 2.14 million shares traded, Indosat by Rp 950 to Rp 15,900 on 64,500 shares and Tambang Timah by Rp 1,100 to Rp 8,900 on 1.42 million shares.

Christina Lim, a director of Harita Kencana Securities, said trading was quite active but it was mostly driven by rumors rather than fundamentals.

"There is almost no trading based on companies' fundamentals now, and most short-term investors buy stocks for speculation only."

Analysts and brokers said that although trading activities had increased over the past few weeks, rising concerns over the country's social and political problems remained a big obstacle for most investors.

Reports said hundreds of people burned vehicles, houses and warehouses in the town of Porsea, North Sumatra, following a dispute over logging with rayon company PT Inti Indorayon.

"Sporadic riots will only scare away potential investors," Christina said. (aly/rid)