Share expected to go flat after reaching their peak

JAKARTA (JP): Trading on the Jakarta Stock Exchange (JSX) is expected to go flat this week because investors are waiting for announcements from the listed companies' annual financial results and new initial public offerings (IPOs).

Securities analysts and brokers said that both individual and institutional investors were likely to be in "wait and see" mode.

The investors will hold trading activities awaiting the outcome of the annual financial reports of blue chip companies, which are expected to be announced this week.

"Some investors are also shifting their investments to the primary market to benefit from new IPOs," an analyst said about the market's gloomy outlook.

Laksono D Widodo of ING Barings Securities said the market will stagnate after showing a decline last week.

"The market will go sideways as investors change investment direction," he said, adding that the decline in the investors' activities would really affect trading activities because a bulk of foreign investments are also expected to enter the market.

The daily turnover volume declined 20 percent to 183.8 million shares from 222 million shares in the previous weeks. The transaction value dropped to Rp 411.42 billion (US$173.6 million) from Rp 577.8 billion ($243.8 million).

Jasmine Tedja of HSBC Securities agreed with Laksono and said the investors were now expecting the listed companies to announce their financial results.

"The investors hold their investments until they announce their financial results," she said.

Securities analysts and brokers said trading on the JSX had been, unusually, "very" active in the past few weeks, bringing its Composite Index to break the 705 mark.

The composite index peaked at 707.37 points on Feb. 13, the second trading day after the Chinese New Year and Idul Fitri holidays.

Analysts and brokers said such a high index was driven by the inflow of foreign funds into the local market.

However, the JSX composite index lost 7.98 points to close Friday at 694.49 from the previous week's 704.47 points.

Most analysts did not see any direct impact from the death of Chinese Patriarch Deng Xiaoping to the drop in trading activities.

Other markets in the region, such as Hong Kong and Taiwan, also did not see any negative impact from Deng's death. Hong Kong share prices ended 0.2 percent higher, while Taiwan's were 1.5 percent higher last week.

Last week's losers include Bank Negara Indonesia (BNI), Telkom, Indosat, cigarette-makers Gudang Garam and HM Sampoerna.

Astra International, however, gained ground despite the drop in prices of other blue chip stocks.

BNI fell by Rp 25 to close at Rp 1,700, Telkom by Rp 100 to close at Rp 4,100, Indosat by Rp 150 to Rp 7,050, Gudang Garam by Rp 50 to Rp 10,800 and HM Sampoerna by Rp 475 to Rp 14,150.

Astra's share rose by Rp 100 to Rp 6,350 due to reports of the company's chief commissioner asking its Japanese principal to increase the local content of its car products in Indonesia.

Analysts said the company's chief commissioner's move was considered as a good sign for the company's future.

Despite the fall of most blue chips, second and third-line stocks saw high trading activities. Midsized shares, including Prima Alloy Steel, Indospring, Kurnia Kapuas, Soedarpo Corporation, Tembaga Mulia, Hotel Prapatan, Ganda Wangsa Utama, booked significant gains.

Prima Alloy Steel ended 97.50 percent higher, rising by Rp 1,950 to Rp 3,950, Indospring by Rp 950 to Rp 2,150, Kurnia Kapuas by Rp 1,275 to Rp 3,075 and Hotel Prapatan by Rp 575 to Rp 3,200.

Analysts attributed the increase of Prima Alloy's share prices to the company's plan to make a stock split. Hotel Prapatan's share prices increased amid the company's plan to hold a shareholders' meeting to approve the appointment of new board directors in the weeks ahead.

The Surabaya-based shoes and rubber sandals producer PT Ganda Wangsa Utama received a good response from investors on a rumor that new investors would acquire a large portion of the company's shares. Investors believed that the entry of the new shareholder would further improve the company's business activities. Its share price rose by Rp 200 to close at Rp 1,125 last week against the previous week's Rp 925. (09)