Share prices fail to sustain Monday's gains

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) failed to sustain their impressive gains yesterday, losing about 3 percent due to profit takings and reports of sporadic riots.

Securities brokers said market sentiment remained bullish in the morning but profit takings by short-term investors and reports of riots in several towns in East Java and Sulawesi killed the buying mood.

The JSX Composite Index, which posted a 1.3 percent gain in the morning session, sank 17.31 points to close at 536.79.

The share prices, which gained 14 percent Monday, were very volatile with many short-term investors taking a profit from the previous day's gains, while others sold their stocks on fears that reports of unrest would further worsen confidence in the already weak economy, analysts said.

Riots erupted in several towns in Java and South Sulawesi over the last few days, with shops and retailers bearing the brunt of the mobs' fury, according to newspaper reports.

The economic crisis gripping Indonesia is leading to massive layoffs and dramatic price increases, heightening social unrest across the country. Most of the riots and other disturbances have been confined to Central Java and East Java.

In the foreign exchange market, the rupiah stabilized at 9,500/10,200 against the U.S. dollar at the close following repeated interventions by the central bank, currency dealers said.

Stock analysts said recent gains in the stock market could primarily be attributed to the influx of foreign funds into emerging markets, including Indonesia.

"The market may seem to be bullish but people are still cautious for the mid and long term," said Mohammad Syahrial, head of research at Pentasena Securities.

The head of research at Socgen Crosby Securities, Goei Siauw Hong, said the influx of foreign funds into Indonesia Monday was driven by market confidence in the recent government economic reforms to improve the country's economy.

He said, however, the newspaper reports on the riots prompted selling activities, some due to fears that the riots would spread and some because other investors deemed it was time to take a profit.

Hong predicted serious unrest in Jakarta in the near period as two million residents would soon return to the city after spending their Idul Fitri holidays in their hometowns and villages.

"More and more people will return to Jakarta to find no job to come back to," he said.

"Things are getting worse for these people as prices of basic commodities continue to rise," he added.

"The market long-term view is still bleak. The latest reforms introduced by the government were solely aimed to improve the country's economy in the long term, not in the short run," he said.

An analyst who asked for anonymity said the market mid- and long-term outlook remained gloomy due to uncertainty over the March presidential election.

He said it was almost certain that Soeharto would remain the country's president but if he chose a wrong man as vice president, it would trigger more problems in the country's politics and economy. (aly)

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