Share prices predicted to decline on the JSX

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) are expected to fall further this week as fears of another U.S. interest rate increase linger.

Securities analysts said a groundless rumor that President Soeharto had suffered a stroke would also continue to affect trade.

"The overall market is likely to slow down, given no fresh incentives from the government for trade," an analyst said.

The U.S. Federal Reserve raised the interest rate by 0.25 percent on March 25 and investors are anticipating another rise.

The next Federal Open Market Committee meeting is scheduled for May 20, 1997.

"Investors anticipate that the U.S. interest rate will increase further," Irfan Nasution from Amsteel Securities Indonesia said. "The groundless rumors of the President's deteriorating health will still psychologically affect the market."

According to the rumor, the President will go to Germany for another checkup. Foreign Minister Ali Alatas denied the rumor, saying that the President was in good shape.

Share prices and the rupiah lost ground Thursday and Friday because of the rumor, despite the President's public appearances.

Rumors on Soeharto's health have circulated several times. In July, last year, share prices and the rupiah went into limbo when the President suddenly went to Germany for a checkup.

But Irfan said the fall of share prices on the JSX was not unique because other regional markets also fell due to the sharp decline on Wall Street.

"I think most regional markets were affected by the fall on Wall Street," an analyst from Danareksa Sekuritas said.

The JSX composite index fell 24.82 points to 637.42 against 662.24 in the previous week, to the lowest close since the end of 1996.

Trading did not open last Monday because of the end of the 1996/1997 fiscal year.

Last week's daily total turnover averaged around 161.76 million shares worth Rp 366.47 billion (US$153.98 million), compared to 183.4 million shares worth Rp 423.16 billion ($173.6 million) in the previous week.

A dealer with a joint venture brokerage firm said it was likely that some foreign investors would pull out of the local market closer to the May 29 general election.

"The coming months will see slow trade because the election campaign will affect the market," she said.

But most analysts and brokers believe the general election will run smoothly.

DBS Securities said that short-term macroeconomic conditions were healthy so that exaggerated concern was groundless.

DBS said the state bank BNI's analysts meeting would be on April 11, and Bimantara Citra's would be on April 15.

One analyst said that if the results of those two companies were predicted to improve, the sentiment of the local market might improve.

Last week, the price of most blue chip stocks fell, except Astra International which was unchanged at Rp 5,900.

The telecommunications company PT Telkom dipped Rp 250 to Rp 3,525, Indosat by Rp 75 to Rp 6,325, Bank Negara Indonesia BNI by Rp 75 to Rp 1,300, Bank Danamon by Rp 175 to Rp 2,575, the cigarette maker PT HM Sampoerna by Rp 875 to Rp 10,375 and its competitor Gudang Garam by Rp 350 to Rp 10,125.

The price of the first family's Bimantara Citra fell by Rp 225 to Rp 2,875 and Citra Marga Nusaphala Persada by Rp 75 to Rp 2,075.

Second line stocks which fell last week included the newly listed Dayasakti Unggul by Rp 325 to Rp 1,125, Matahari by Rp 50 to Rp 3,450, Multipolar by Rp 1575 to Rp 1,425 and BII by Rp 100 to Rp 1,725. (09)