Share trading to dwindle as election campaign starts
Share trading to dwindle as election campaign starts
JAKARTA (JP): Stock trading on the Jakarta Stock Exchange is
likely to slow down this week as the country's three political
parties begin their election campaigns, said securities analysts.
The analysts said that the trading outlook was cautious, with
most foreign investors taking a wait-and-see position.
"I recommend my clients to sell, or at least take a wait-and-
see position until the direction is clearer," one foreign analyst
said.
Golkar, the Moslem-based United Development Party and the
Indonesian Democratic Party, competing for 425 seats in the House
of Representatives in the May 29 election, started their
campaigns Sunday.
"Campaigning could spark riots like those taking place in
Central Java," the analyst said of the rioting which hit several
towns in Central Java early this month. "If it happens again, it
will certainly hurt the stock trading," he said.
The analysts, however, said that local investors would not be
as fearful as foreigners because they knew the situation better.
"Local investors would continue their speculative buying on
certain selected stocks," one analyst said.
According to the Jakarta military command, there will be more
than 25,000 police and army personnel mobilized to guarantee
security ahead of the May 29 election.
The election campaign kicked off on Sunday April 27 and will
end on May 23.
The gloomy prospects of the regional stock markets would
further worsen the trading outlook at home, the analysts said.
Foreign investors were bailing out on an uncertain U.S.
interest rate outlook amid better-than-expected performance in
Latin American and European markets, they said.
Senior analyst for ING Baring Securities, Laksono Widodo, said
that the trading activities would not as active as the previous
week.
DBS Securities shared the same view, saying that the market
would be cautious and foreign investors would continue to go
sideline.
"Local investors seemed to have recovered from the slide of
share prices over the past month, resulting in a flurry of margin
calls in the industry, avidly speculating on cheap-priced
stocks," DBS said.
Laksono said if the election campaign proves to have little
impact on the market, the foreign investors might flock in, and
on the contrary, if the election campaign has a negative impact
on the market, the foreign investors might go sideline.
"The foreign investors are cautious and they do not want to
buy or sell," he said.
This year's election, the sixth during the New Order
government under President Soeharto, has been preluded by clashes
among supporters of the rival parties in Central Java.
Ethnic and religious-motivated riots in Java and Kalimantan,
as well as a politically motivated riot in Jakarta on July 27,
1996, have been widely believed to depict a growing public
discontent of the government.
Such unrest is feared to reoccur, especially during the
campaigning, though the government has tightened electioneering
rules.
The JSX composite index rose 8.56 points last week to 650.82
against the previous index of 637.59.
Total average daily turnover also increased to 217.1 million
last week against 180.1 million shares in the previous week.
Total average daily value, however, decreased to US$165.6
million (Rp 397.44 billion) from $189.2 million in the previous
week.
Last week, cigarette-maker HM Sampoerna, dipped by Rp 250 to
Rp 9,425 and its competitor Gudang Garam by Rp 775 to Rp 10,000.
State telecommunications PT Telkom remained unchanged at Rp
3,600 while Indosat was up Rp 25 to Rp 6,700.
Bank Negara Indonesia and Bank International Indonesia
remained unchanged at Rp 1,375 and Rp 1,750 respectively.
Most analyst said that if the election campaign goes well,
without any clashes, the coming weeks would see more purchase by
investors as the price of the stocks have been cheap.
"Actually, it is now time to buy because the stocks have been
undervalued," one analyst said, adding that the time to sell
would be after the country's May general election. (09/hen)