Share prices expected to remain stagnant

Share prices expected to remain stagnant

JAKARTA (JP): Share prices on the local market are expected to
remain stagnant this week, with foreign investors continuing to
shun the market as a result of the worsening political and social
situation in the country, according to securities analysts and
brokers.

They said foreign investors were still worried that persistent
students street demonstrations, which have become a common sight
in the capital over the past few weeks, could turn violent at any
time.

A securities analyst at a joint-venture brokerage said that
political tension which left the market unscathed in recent weeks
was now likely to dampen sentiment ahead of the year-end holiday.

"The most optimistic scenario is that share prices will remain
stagnant, but the most pessimistic scenario is that they will
decline sharply," the analyst said.

A sales broker with Trimegah Securindolestari, Vonny Juwono,
said a lack of positive leads at home would make share prices on
the local market highly dependent on the movement of other
equities markets in the region.

"When regional markets rebound, then our market will follow
suit. But when regional markets go down, our market will endure
the same fate," she said.

The head of research at Mashill Jaya Securities, Edhi S.
Widjojo, shared the view that the market would remain under
pressure toward the end of the year given that foreign funds were
unlikely to reenter the country before early 1999.

"Most foreign fund managers do not have Indonesia on their
investment list for the time being," he said.

Stockbrokers said foreign investors currently active in the
country were engaged in speculative trading.

The Jakarta Stock Exchange (JSX) main composite index slid 0.5
percent (1.92 points) to 390.39 last week from the previous
week's close of 392.32.

Last week's average daily turnover fell to just 283 million
shares valued at Rp 237.91 billion, compared to 469.17 million
shares valued at Rp 473.23 billion in the previous week.

Stockbrokers said transactions volume and value dropped
because most foreign investors steered clear of the market.

In times of bearish sentiment, investors would be well advised
to scrutinize the investment potential of individual firms, Vonny
said.

"Investors would be better to watch certain firms closely and
try to look for attractive spot levels," Vonny said.

However, some experts said that tracking the fundamentals of
the country's corporations was no longer a meaningful guide for
investors because nearly 80 percent of the 289 listed firms are
on the brink of collapse as a result of the economic crisis.

They said the steep depreciation in the value of the rupiah
against the U.S. dollar had caused the foreign debt of local
firms to increase by up to tenfold.

Currency dealers said the rupiah would also remain
directionless this week, with most market participants,
especially those from overseas electing to remain on the
sidelines.

They said the rupiah was expected to trade at between 7,000
and 8,000 against the U.S. dollar in the coming weeks. Last week
the rupiah closed at 7,525, down slightly from its close at 7,450
in the previous week.

The government has expressed optimism that the rupiah could
advance to as high as 6,500 against the dollar by the year's end
due to the easing of interest rates.

Financial analysts said the target was feasible because the
central bank, Bank Indonesia, would be converting dollar loans
from international institutions into rupiah between now and the
end of the month, which in effect would prop up the local
currency. (aly)