Saddam's capture may lift stocks to new high

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.