Rupiah steady despite govt's bank suspensions

Rupiah steady despite govt's bank suspensions

JAKARTA (JP): The rupiah remained steady yesterday but share
prices on the Jakarta Stock Exchange (JSX) tumbled 2.7 percent
following the government's latest move to restructure the
country's shattered banking system.

Currency dealers and stock brokers said the persistent
volatility in the regional market, especially the weakening
Japanese yen, also adversely affected domestic market sentiment.

Dealers said rupiah opened lower at 11,900 following market
talks that the government would take action against troubled
banks under the supervision of the Indonesian Bank Restructuring
Agency.

They said such news prompted most operators to take positions
to purchase dollars in anticipation of another massive run on
deposits in the country's banking system.

"Some operators started to buy dollars again after hearing
news that the government would suspend some problem banks," a
chief dealer with a local private bank said.

The rupiah closed at 11,800 against the American dollar
yesterday, compared to its close at 11,700 the previous day.

The government moved yesterday to suspend the operation of
Bank Dagang Nasional Indonesia, Bank Modern and Bank Umum
Nasional in an effort to reassure international investors of the
government's commitment to clean up the country's ailing banking
system.

The government is also to take over the shareholdings of Bank
Danamon, Bank PDFCI, Bank Tiara Asia and Bank Central Asia.

All those banks, except Bank Central Asia, are listed on the
JSX.

Trading in the six banks was suspended yesterday.

Following the suspension, local stock prices fell sharply. The
JSX Composite Index ended 10.98 points lower to close at 388.34.

Trading turnover totaled 206.98 million shares changing hands
valued at Rp 292.57 billion (US$25.29 million).

Losers outpaced gainers 60 to 18 with 86 stocks unchanged.

Associate director of state-owned securities house Bahana
Securities Andre Cita said the government's backtracking on the
privatization plan on cement producer PT Semen Gresik had killed
investors' positive sentiment in state companies.

"Foreign investors interest on the privatization of Semen
Gresik had declined after learning the backtracking ... and this
negative sentiment continue to extend to other state companies,"
he said.

The government confirmed Thursday it would retain a majority
stake in Semen Gresik and it would divest only 14 percent of its
shares in the cement maker, instead of selling 35 percent
announced earlier.

"Inconsistencies like this will not be bad for the state
companies but instead will hammer our market even harder," a
broker with Trimegah Securindo Lestari said.

Brokers attributed the sharp fall in stock prices to massive
selling of Semen Gresik and state-telecommunication provider PT
Telkom and other state-owned companies like tin mining firm PT
Tambang Timah and gold and nickel producer PT Aneka Tambang.

Semen Gresik fell Rp 1,975 to Rp 6,775 on 4.11 million shares
while market leader Telkom shed Rp 125 to Rp 2,950 on 10.87
million shares.

Aneka Tambang slid Rp 150 to Rp 1,925 on 30.25 million shares
traded and Tambang Timah fell Rp 525 to Rp 6,400 on 276,000
shares. (aly)