Share prices up, rupiah muted over new cabinet line-up

JAKARTA (JP): Local stock prices rebounded yesterday while the rupiah remained weak in response to Soeharto's resignation and the announcement of a new cabinet line-up by President B.J. Habibie, stockbrokers and currency dealers said.

They said the increase in stock prices was largely supported by speculative trading by local brokerage houses for second- and third-line stocks in the absence of foreign investors.

"Trading activities remained quiet for the whole trading day because investors are still cautious over the country's political situation," a broker with Trimegah Securindo Lestari said.

"There was no significant trading at all by foreign institutional fund managers," the dealer said, adding that most foreign brokerage houses were closed following the turbulent riots which left more than 500 people dead last week.

The JSX Composite Index rose 4.9 percent or 21.13 points to 445.14 points yesterday with a total of 199.68 million shares changing hands in the regular market valued at Rp 207.59 billion (US$18.87 million).

Pentasena Securities research head Mohammad Syahrial said the increase in stock prices was just a euphoric market reaction to the resignation of Soeharto rather than a recovery of investor confidence in the country's economy.

Mashill Jaya Securities research head Tjandra Kartika said the country's political situation posed the biggest obstacle for foreign investors wishing to place their funds in the local market for the medium and long term.

"The market is relatively stable for now, but it will remain turbulent in the medium and long term," he said.

A Trimegah's broker said that some local investors continued to dump stocks linked to former president Soeharto's family, like conglomerate Bimantara Citra and toll-road operator PT Citra Marga Nusaphala Persada (CMNP).

The two stocks have been under severe selling pressure over the past few months due to speculation that Soeharto was losing his grip on power.

Bimantara Citra, controlled by Soeharto's second son Bambang Trihatmodjo, fell Rp 25 to Rp 375 on a total volume of 15.84 million shares, while CMNP, controlled by Soeharto's daughter Siti Hardijanti Rukmana, slid Rp 25 to Rp 400 on a total turnover of 8.19 million shares.

In the currency market, the rupiah remained weak in very quite trading, dealers said.

The rupiah closed at 10,600/11,200 against the U.S. dollar in the Jakarta spot market after weakening to as low as 11,500 yesterday.

The dealers said rupiah trading remained thin for the whole day because most operators were still waiting for concrete steps from President B.J. Habibie's new economic team.

"The market is still cautious to make any moves on the rupiah since the country's political atmosphere remains uncertain," a dealer with a local bank said.

Dealers said the currency market had welcomed the new economic team but the uncertainties over the political situation would pose another barrier for investors.

"The market has not seen any clear-cut measures on the political agenda," the dealer said. (aly)