Share prices expected to bounce back

JAKARTA (JP): The share prices on the Jakarta Stock Exchange are expected to bounce back this week after losing ground last week due to selling pressures on selected big capitalized stocks.

Analysts and brokers attributed the slow trading activity last week to an overreaction to the increase of the U.S. Federal Reserve interest rate.

Edwin Syahruzad of Amsteel Securities said the trading activities would recover because most investors would enter the market again.

"Prices of several stocks have been very low and it will be timely to buy such shares," he said.

Edwin said the JSX composite index, which booked a significant loss two weeks ago, had showed a positive direction last week, gaining several points.

Though the gain was small, the index increase was very encouraging, he said, adding that the upward trend would likely to continue this week as fears over the possible increase in interest rate were over.

The FED increased the interest rate by 0.25 percent to 5.50 percent on March 25.

Approaching the end of the week, the market showed signs of recovering, though small, they said.

The JSX composite index rose 6.13 points to 662.24 last week against 656.11 in the previous week.

However, daily turnover fell to average 183.4 million shares last week in comparison to 194.9 million in the previous week.

The daily transaction value also went down to Rp 423.16 billion (US$173.6 million) last week against Rp 441.96 billion ($185.7 million) in the previous week.

A broker with a joint-venture firm attributed the positive trading activity late last week to the listing of Daya Sakti Unggul and Surya Semesta Internusa on the JSX.

Daya Sakti exchanged 69 millions shares with a total value of around Rp 84 billion while Surya Semesta Internusa exchanged 83 million shares worth Rp 82 billion.

"The listing of the two companies halted a further drop in trading activities last week," said one broker from a brokerage firm.

Edwin, however, said that the overreaction of the local market to the increase in U.S. FED interest rate was groundless. "The impact of the increase in U.S. FED interest rate is relatively small on the JSX," he said.

Due to that, he predicted the big cap stocks which were under heavy selling pressure early last week to perform strongly this week because rumors on Telkom shares and cigarette-making companies had disappeared.

He predicted the midsized stocks will perform well this week after a downward market activities last week.

Most big cap stocks were up last week, except the country's telecommunications company PT Telkom's share price, which remained unchanged at Rp 3,625 and Indosat, which fell by Rp 125 to close at Rp 6,400.

Other blue chips gained last week. They included Bank Negara Indonesia which rose by Rp 25 to Rp 1,375, Astra International by Rp 50 to Rp 5,900, Bimantara Citra by Rp 75 to Rp 3,100, HM Sampoerna by Rp 200 to Rp 11,250 and Gudang Garam by Rp 400 to Rp 10,475.

Last week, top gainers were second line stock including Modern Realty, which rose by Rp 1,900 to Rp 3,300, Daya Sakti Unggul by Rp 500 to Rp 1,450, Bank Mashil Utama by Rp 225 to Rp 2,200 and Bank Pikko by Rp 175 to Rp 1,200.

Last week, PT Semen Cibinong held its extraordinary general shareholder meeting approving the company's stock split and bonus shares distribution.

President of the firm, Hashim S. Djojohadikusumo, however, declined to disclose the company's financial performance in 1996.

But according to DBS Securities, Semen Cibinong, which recorded a net profit of Rp 92 billion in 1995, was projected to earn in profits worth Rp 102 billion in 1996 and projected to reach Rp 132.4 billion in 1997.

Hashim also noted the company's plan to hold rights shares in November this year but declined to mention the amount of the rights shares to float.

DBS predicted that the firm would raise around Rp 500 billion from rights shares in November this year with proceeds to to partly finance the company's expansion plan in a $210 million Myanmar cement plant, to refinance the short term debts and to finance the company's Dwima Agung cement plant in Tuban.

Semen Cibinong share price surged by Rp 75 to Rp 7,250 on the last trading day Thursday last week against Rp 7,175 in the previous week.

Last week's losers included Bumi Modern Hyatt which dropped by Rp 300 to Rp 1,500, Sekar Laut by Rp 125 to Rp 1,100, Ugahari by Rp 300 to Rp 1,200 and Intinusa Selareksa by Rp 400 to Rp 1,750. (09)