Saddam's capture may lift stocks to new high

Rendi A. Witular, The Jakarta Post, Jakarta

The capture of former Iraqi ruler Saddam Hussein on Saturday by the U.S.-led coalition forces is expected to trigger a rally on global stock markets this week, thus providing impetus for the Jakarta Composite Index to continue its rally, analysts said.

The listing of state-owned gas company PT Perusahaan Gas Negara (PGN) would also help the Jakarta stock index to hit a new record, after hitting a four-year high last week.

Chief economist at Danareksa Research Institute Raden Pardede said that the U.S. stock market would directly benefit from the news as it would boost investor confidence in the U.S. government.

He expected that a surge in the Dow Jones index would indirectly push stock indexes in Asia higher, including those in Indonesia.

"The detention of Saddam will indirectly benefit the rally on the local bourse, in that it will tail the positive sentiment in Wall Street and other benchmark indexes in Asia," said Raden.

The recent surge in the Jakarta stock market was believed to have been stimulated by a jump in Dow Jones industrials, which closed above 10,000 points for the first time in 18 months last week on rising confidence toward the U.S. economy, and other regional markets.

Tailing the surge in the Dow Jones was the Tokyo Stock Exchange's Nikkei-225 index, which gained 94.52 points to 10,169.66 on Friday, while the broader Topix index closed up 7.77 points or 0.78 percent at 998.70.

In Hongkong, the key Hang Seng Index gained 39.84 points on Friday to close at 12,594.42 on Wall Street sentiment.

Saddam's captured near his home town of Tikrit was confirmed after soldiers tore off a false beard and took samples for DNA identity tests after digging down into a cellar during an overnight raid on a house.

Meanwhile, an analyst with a state-owned brokerage firm said the listing of PGN on the Jakarta Stock Exchange and the Surabaya Stock Exchange on Monday would add fuel to the Jakarta stock index rally, which is expected to last until the end of this year.

"PGN is a company with good prospects, given its monopoly position in the country's gas distribution network. The sentiment, coupled with a possible rally on the global markets will help support the Index to between 660 and 680 this week," he said.

The Index closed higher at 656.74 last week, its highest since Jan. 21, 2000, against 638.04 the week before.

Average daily volume was 1.86 billion shares valued at Rp 883 billion (US$103 million) compared with 1.33 billion valued at Rp 819.63 billion the previous week.

Minister of State-Owned Enterprises Laksamana Sukardi is scheduled to inaugurate the debut of PGN share's on the local bourses.

The government has sold PGN shares via an initial public offering (IPO) at Rp 1,500 per share.

Around 60 percent of the IPO proceeds will go to the state treasury, while the remaining 40 percent will go to PGN to help finance the company's gas pipeline projects.

Many analysts believe that PGN shares will surge to between Rp 1,600-1,700 per share as the company had earlier said it expected sales revenue to rise by 11 percent this year to Rp 3.5 trillion from Rp 3.15 trillion in 2002 on an increase in the volume of gas distributed.

The company has estimated that an average of 750 million cubic feet per day of gas this year will be produced, and that in the next four years its capacity will soar to 1.24 billion cubic feet per day on gas sales to Singapore.