Share prices on JSX projected to rise further
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are expected to go up further this week despite worries of a possible hike in U.S. interest rates, analysts said.
The Fed's Open Market Committee is scheduled to meet on Tuesday.
"Our market dropped too far in the last two months, so if the Fed does raise interest rates next week, the impact on the JSX would be very minimal," a senior manager with a Hong Kong-based brokerage firm told The Jakarta Post here over the weekend.
He predicted narrow price movement on the JSX because foreign investors would not make other big deals following heavy bargain hunting on selected blue chips last week.
The manager, who declined to be named, said that market outlook is fairly positive due to both the return of foreign investors and the active participation of local investors.
He cited a more stable political situation and strong macro- economic stability, supported by Bank Indonesia's recent decision to increase the minimum reserve requirement for commercial banks, as two main reasons for foreign investors coming back.
He added that interest in blue chips still exists in the market because local investors also hunt such stocks to take advantage of the foreigners coming back into the market.
"But we can't expect a strong rally (like this week's) on the JSX as many fund managers have limited their exposure to our market," he noted.
"And I would also say that it's very difficult for the JSX to pass the 600 level or even the 580 level in the next three months," he said.
DBS Securities also noted in its weekly report that there are no major reasons based on fundamentals for the JSX index to increase significantly.
"We see a support level of 545 and a resistance level of 575," DBS said.
Another analyst with a local brokerage said that technically the market may see upward pressure this week but he noted that fundamentally, investors are also anticipating a revision of earnings in the second half of the year on the likelihood that banks may up their lending rates in the near future.
Several dealers contacted by the Post said that investors will keep a close look on several stocks like Astra International and the Lippo Group.
Lippo Securities and Lippo Life are scheduled to held extraordinary shareholders meeting on Friday to approve the group's major internal acquisition plan.
On Thursday, James Riady, deputy chairman of the Lippo Group announced a six-point sweetener in the proposed restructuring of his family's finance companies -- Lippo Securities, Lippo Life and Lippo Bank.
The six point incentives will include a permanent waiving of the 10 percent management fee on Lippo Bank's pretax earnings, effective Sept. 30, and will be worth over Rp 680 billion.
Other incentives include a reduction in the price of Lippo Securities' acquisition of Lippo Life from Rp 244 billion (US$104 million) to Rp 237 billion and a cut in the price of Lippo Life's acquisition of Lippo Bank from Rp 658 billion to Rp 638 billion.
"This announcement is a reflection of the Lippo Group's efforts to listen and respond to the views of its independent shareholders and investors," James said.
"I should say that Lippo's move is rather complicated. The main point in such transactions is less attractive because the investing public would not get many advantages," a dealer told the Post.
"It would be different if Lippo Bank shares to be sold are the shares owned by the public, not the founders," he added.
The dealer, however, declined to speculate on how the shares of Lippo Life, Lippo Securities or Lippo Bank would perform this week.
Astra
JSX share prices rebounded 3.6 percent last week with a total turnover of 594 million shares worth Rp 1.4 trillion, partly due to a stronger performance on Wall Street.
The JSX Composite Index edged up 19 points to close the week at 568.99 points.
A senior dealer said a strong rally last week was supported by foreign and local buying on selected blue chips, particularly Astra shares which were buoyed by rumors of a take-over plan.
A senior dealer with a foreign brokerage said that there were two different rumors on Astra in the last two weeks.
"The first rumor said that Astra's founders were disappointed with the performance of the company's shares and then ordered the management to do something to make the prices better reflect its business fundamentals," the dealer told the Post.
"Another version said that one of Astra's largest shareholders, Danamon, was willing to sell its position to a politically well-connected businessman but was holding out for a higher price before executing the deal."
Astra's share price rose 26 percent last week to Rp 3,300 from the previous week's close of Rp 2,600.
Astra was also recorded as the most active stock both in volume and value, with 57 million changing hands worth Rp 189 billion.
"I would say that it's quite difficult to push up Astra's share prices because its foreign portion is no longer available," the dealer added.
The other most traded stocks were HM Sampoerna (with a trading value of Rp 84 billion), Telkom (Rp 74 billion), Anwar Sierad (Rp 65 billion), Lippo Life (Rp 54 billion), Bimantara (Rp 53 billion), Gudang Garam (Rp 38 billion), Lippo Bank (Rp 31 billion), Kalbe Farma (Rp 30 billion) and Duta Anggada (Rp 26 billion). (alo/hen)