Share prices are likely to undergo correction

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are expected to fall this week as profit takers cash in on last week's big gains.

Securities analysts said profit taking would dominate trade at the start of the week, with selling pressure dragging prices lower.

But shares may start to rise toward the end of the week with institutional investors entering the market to take advantage of stocks made cheap by profit taking.

Asian Development Securities' head dealer Vera Marpaung said over the weekend that "market sentiment is likely to slow down this week as most share prices, which booked strong gains last week, have already reached their peak levels".

Harita Securities' president director, Christina Lim, said that after reaching a record high, the Jakarta bourse would probably undergo a correction.

Another broker said most foreign investors would focus on other markets in the region like Thailand and Hong Kong.

Trade was strong on the JSX last week even though Hong Kong was closed for three days. Hong Kong is often seen as gauge for many Indonesian investors.

The JSX Composite Index hit a record 736.59 Friday.

Last week average daily turnover fell to 332.3 million shares, while average daily transaction value fell 19 percent to Rp 537.67 billion (US$224.03 million).

Analysts said share prices rose markedly because of buying by big local and foreign institutional investors.

Local buyers bought heavily early last week on expectations the government would release a deregulation package ahead of the next Consultative Group on Indonesia meeting.

"The content of the package is expected to revolve around the improvement of Indonesia's business environment and the reinforcement of Indonesia's position as a premier destination for foreign investment," DBS Securities said.

The government will announce the deregulation package this week.

Securities analysts said foreign investors jumped on the bandwagon toward the end of last week after the Federal Open Market Committee did not change its interest rates, propelling the market to new highs.

DBS Securities said medium-term macroeconomic fundamentals remained favorable and that first quarter corporate earnings were in line with the expectations, although second quarter earnings are expected to be weaker because of the May general election.

Vera said the market would probably rise and hover between 740 and 750 points this week.

Another analysts predicted the JSX composite index would reach 750 points by the end of July, and 800 points by the end of 1997.

Blue chip stocks ended the week mixed with Telkom gaining Rp 200 to Rp 4,175 and Indosat rising Rp 525 to Rp 7,700.

Cigarette maker HM Sampoerna rose Rp 1075 to Rp 10,000, while competitor Gudang Garam slipped Rp 25 to Rp 9,975.

Bank Negara Indonesia climbed Rp 75 to Rp 1,575, while Bank Internasional Indonesia lost Rp 25 to Rp 2,050. (aly)