Shares are likely to drop again after slight rebound
Shares are likely to drop again after slight rebound
JAKARTA (JP): After a slight rebound late last week, share
prices on the Jakarta Stock Exchange (JSX) are likely to fall
again this week despite the International Monetary Fund's
decision to inject more funds into the country.
Analysts said that funds from international financial
institutions such as the IMF, despite good in nature, would not
do much to enliven investors sentiment in the local market due to
the country's devastating economic and political situation.
Vickers Ballas' head of research Tamara Noraya Soewarno said
Friday: "The country has so many problems this time around ...
social and political and economic problems which need to be
solved immediately."
"So news on the IMF's fund will not ignite any massive buying
spree in the local market," she said.
Following the debt accord between the Indonesian government
and the Paris Club Members on Wednesday to rollover the country's
US$4.2 billion sovereign debt, the IMF approved on Friday a $940
million payment from its $11 billion bailout funds to help
Indonesia overcome its financial catastrophe, manage external
payments and improve the rupiah.
Analysts said they believed that unlike shares, the rupiah
would perform better this week, partly due to positive sentiment
on the IMF's latest loan disbursement.
The rupiah, which closed firmer at 10,950 on Friday last week
compared to its close at 11,200 the previous week, continued to
hover around the 11,000 level against the U.S. dollar over the
past two weeks.
The analysts said that hope for a U.S. interest rate cut this
week was also expected to boost the rupiah's stance against the
dollar.
Mashill Jaya Securities' head of research Edhi Widjojo said,
"The cut in the interest rate will almost have no impact on the
local stock exchange."
He said the interest rate cut would not bring much help to the
ailing stock trading given the poor condition of the country's
fundamental economic indicators.
"With no signs of economic recovery, most investors prefer to
put their funds in the money market," he said, pointing out the
60 percent interest rate of time deposits in the banking system.
Noraya said that though some stocks had been cheap, foreign
fund managers were still reluctant to enter the hammered local
market as political uncertainty and poor economic conditions
hinder them to do so.
She said foreign fund managers continue to discard the stocks
with strong fundamentals and dollar earnings, like pulp and paper
producer Indah Kiat, Tjiwi Kimia and fishing firm PT Daya Guna
Samudera.
Stock brokers said that market sentiment would remain bearish
this week as market fears for a possible massive riot ahead of
the anniversary of a bloody communist coup attempt of 1965.
Bali's Hendra said, "Hopefully there will be no riots but the
market feels that there will be some sort of demonstration this
week."
News reports said that the military has beefed up its presence
in Surabaya, East Java, amid ubiquitous speculation that a large
scale demonstration and even riots were being planned for Sept.
30.
Sept. 30 is a historical day for Indonesians as it marks the
attempted communist coup leading to the ascension of former
President Soeharto into power in 1965.
The Jakarta Stock Exchange Composite index rose 3.55 points to
275.22 last week from 271.67 the previous week.
Total daily average turnover rose to 251.64 million shares
changing hands last week compared to 220.94 million shares the
previous week.
But daily average transaction value fell to Rp 190.56 billion
last week compared to Rp 272.29 billion the previous week. (aly)