Rupiah weakens, stock prices gain ground

Rupiah weakens, stock prices gain ground

JAKARTA (JP): The rupiah weakened to 14,800 against the U.S.
dollar yesterday over regional weaknesses as local stock prices
gained 1.9 percent on arbitrage trading of dollar-valued stocks.

Currency dealers and stockbrokers said the market was eyeing
the government's new deal with the International Monetary Fund
(IMF), expected to be signed today.

The good news that the IMF might soon disburse its loans to
Indonesia, however, failed to soothe the domestic market, still
plagued by political uncertainties.

"Good news from the IMF is only having a little impact on the
market. The rupiah's standing today was very much undermined by
the yen's fresh fall against the dollar," a chief dealer with a
local foreign exchange bank said.

He said rupiah fell to an intraday low of 15,100 to the U.S.
dollar in quiet trading following the yen's fall to 141 against
the greenback.

The rupiah, however, rebounded to above the 15,000 level as a
protest organized by the Indonesian Prosperous Trade Union ended
peacefully and was smaller than expected.

In ended the day at 14,800/900, compared to Tuesday's close of
14,500.

"The market was relieved that the protest did not escalate
into riots," the chief dealer said.

Stockbrokers and analysts said the weakening rupiah had
encouraged stock investors to conduct arbitrage trading on dual-
listed stocks to capitalize on the rupiah's fall.

The Jakarta Stock Exchange (JSX) composite index closed 7.875
points higher at 430.960.

"It's always like that. When the rupiah drops, investors will
run after dual-listed stocks like Telkom to benefit from the
difference between their dollar and rupiah prices. This in turn
will drive up the benchmark price index," Vickers Ballas Tamara's
head of research, Noraya Soewarno, said.

She said the Indonesian stock market's standing had been saved
by dual-listed stocks like state-owned telecommunications firms
PT Telkom and PT Indosat and tin miner PT Tambang Timah, which
together account for 30 percent of the market capitalization.

Telkom gained Rp 150 to close at Rp 4,050 on 1.4 million
shares traded, Indosat climbed Rp 175 to Rp 15,875 on 603,500
shares and Tambang Timah rose Rp 25 to Rp 6,475 on 173,000 shares
traded.

Other movers were large-cap cigarette maker PT Gudang Garam
and its competitor PT H.M. Sampoerna. Gudang Garam gained Rp 650
to close at Rp 8,650 on 1.6 million shares traded and Sampoerna
rose Rp 25 to Rp 2,025 on 20.9 million shares.

Surprise gainers included the Salim Group's cement company PT
Indocement Tunggal Prakarsa and food giant PT Indofood Sukses
Makmur.

Indocement stocks rose Rp 225 to Rp 3,975 on 301,000 shares
traded on news that it would export about two million tons of
cement this year.

Indofood shares gained Rp 25 to close at Rp 1,300 on 7.36
million shares traded after the food giant said it would be able
to service its foreign debt through its US$100 million cash in
hand and this year's expected $300 million of exports.

Stock analysts, however, warned that this bit of the buying of
the Salim Group's companies did not represent significant
developments for those companies.

They said investors, especially foreigners, had been buying
quality stocks, especially those of state-owned firms in which
the government planned to divest more of its stakes.

However, they warned that the Capital Market Supervisory
Agency's (Bapepam) sudden move to investigate securities houses
for possible insider trading of state-owned cement producer PT
Semen Gresik stocks could discourage investors from investing
here for a while.

If the agency could move objectively and transparently against
those securities firms, it would encourage foreign investors to
return their funds here, he said. (rid)