Share prices on JSX likely under pressure

Share prices on JSX likely under pressure

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
could be under pressure this week as some foreign investors fear
that the recent devaluation of the Philippine peso will have a
domino effect on the Indonesian rupiah.

Analysts said over the weekend that local investors would
follow the selling mood, "not because of the peso news", but
rather because of their concern over the central bank's recent
move to ban new loans for land acquisition and development.

"This policy affects not only property developers, but also
banks," one analyst said. "That's why I am quite sure property
and bank shares will remain under pressure," the head of research
at Morgan Grenfell, Digby Falkiner, said.

The peso devaluation, other analyst said, would only be cause
for concern for foreign investors because they were not really
familiar with "our economic fundamentals".

The central bank has for several years floated the rupiah into
a basket of foreign currencies, he said. "So it is no longer
necessary for Indonesia to devalue its currency like Thailand and
the Philippines did," he said.

"Indonesia's economy remains stable, so there's nothing to
worry about," another analyst said.

The analyst said that Indonesia's stable economic growth and
the long-term nature of foreign debt and controllable short-term
private debt were factors which could prevent any further
speculation of the rupiah.

A senior dealer at Asian Development Securities said the
banking stocks which were under profit taking late last week
would continue to decline this week, suffering from the
government's new lending policy.

"The regulation will translate into the further decline of
several banking stocks," she said.

She said banks allocated a large amount of credit to property
sectors over the past few years and the new policy would hurt
their annual lending target.

Besides that, local investors were likely to cash in stocks to
generate fresh funds for buying new stocks at the primary market,
where some companies were expected to sell their new shares.

Companies which are scheduled to make a JSX debut include
Lautan Luas on July 21, Maharani Finance on July 16, Bank Arya of
the Ongko Group on July 31, and Koey Steel on August 6.

The JSX Composite Index hit a new record high of 740.83 on
Tuesday.

However, the index declined over the following days to close
the week at 723.42 points, down from 736.60 points in the
previous week.

Average daily turnover and transaction performed differently
last week as the turnover volume decreased while transaction
value increased.

Last week the average daily turnover declined 6 percent to
only 312.3 million shares from 332.3 million shares in the
previous week.

The average daily transaction value rose 9 percent to Rp
590.88 billion (US$246.2 million) from Rp 537.7 billion in the
previous week.

"The JSX composite index is expected to hover around 715 and
720 this week, but won't fall below 700," an analyst from a joint
venture securities company said.

Most blue chip stocks lost value last week. State-owned Telkom
dropped Rp 250 over the week to close at Rp 3,925, while
satellite-operator Indosat was down Rp 275 to Rp 7,425.

Cigarette-maker HM Sampoerna lost Rp 575 to close at Rp 9,425
while competitor Gudang Garam slipped Rp 550 to Rp 9,425.

Most banking stocks suffered losses last week with Bank Negara
Indonesia (BNI) down Rp 50 to Rp 1,525, Bank Internasional
Indonesia (BII) losing Rp 150 to close at Rp 1,900, Bank Danamon
shedding Rp 100 to close at Rp 1,175, Bank Dagang Nasional
Indonesia (BDNI) dropping Rp 275 to Rp 1,425, and Bank Niaga
losing Rp 200 to Rp 6,600.

Some securities dealers expected foreign funds managers to
enter the market in anticipation of better-than-expected second
quarter results.

"We're waiting for good second quarter results," a dealer from
Asian Development Securities said. (aly)