Share prices expected to be slightly firmer
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are projected to be slightly firmer this week with the expected announcement of the International Monetary Fund (IMF) bailout package for Indonesia.
Securities analysts said the decline of regional markets would not influence trading activities on the JSX as most investors were watching closely for the outcome of talks between Indonesia and the IMF.
"The IMF financial package and its conditions are the key factors for most investors," Harita Securities' president Christina Lim said over the weekend.
"While it is difficult for investors to predict the direction of the market, this week will see a different mode," she said.
The IMF and Indonesian government officials have not yet hinted the amount or conditions of the financial package but have said they are optimistic about the outcome.
Securities analysts and brokers in Jakarta speculated that the package would be announced this week and would in the short term restore market confidence.
Harita's Christina said the decline of stock prices on the JSX over the past few weeks was essentially caused by a loss of confidence in the country's ailing economy.
Indonesia's economy was the hardest hit by the monetary crisis plaguing the region following the devaluation of the Thai baht in early July.
Since then, the Indonesian rupiah has lost about 35 percent of its value against the U.S. dollar, and share prices on the JSX have dropped almost 30 percent.
Last Friday, the JSX composite index remained below the 500 level at 490.39 points.
Asian Development Securities' director Naotake Ikeda said details of the IMF package and the conditions attached to it would not lead investor sentiment in the near future.
"Even if the government announces the result of the talks, it will not immediately provide a fresh sentiment for the market. The effects of the package would be felt in the long term," he said.
"I think most foreign investors will have to closely watch the conditions of the financial package," he said.
Analysts speculated that the IMF-led financial package would demand the Indonesian government introduce a complete financial reform package, which would include the liquidation of several ailing banks.
Edi Widjoyo of Mashill Jaya Securities said that bank liquidations would send a positive mood to the stock market.
"Though it is not new news, the liquidation of insolvent banks could increase market sentiment as it is in line with investors' expectations," he said.
The JSX composite index fell 5.8 percent, or 30.28 points down, to close at 490.39 last week.
Average daily turnover rose 3 percent to 353 million shares changing hands last week compared to 340.9 million shares the previous week.
Total daily value fell to Rp 338.98 billion (US$96.85 million) last week compared to Rp 416.51 billion the previous week.
Most big capitalized stocks fell last week on the back of lackluster trading due to the impact of the decline in the regional markets, brokers said.
State telecommunications firm PT Telkom slid Rp 250 to close at Rp 3,375; satellite operator Indosat fell Rp 275 to Rp 8,700; cigarette maker Gudang Garam Rp 375 to Rp 8,725 while its competitor Sampoerna slipped Rp 200 to Rp 5,800.
Bank Internasional Indonesia fell Rp 50 to Rp 750, Bank Negara Indonesia was unchanged at Rp 775 and Bank Dagang Nasional Indonesia shed Rp 25 to Rp 525. (aly)