Soeharto wants investors to help local capital market

Soeharto wants investors to help local capital market

JAKARTA (JP): President Soeharto told local institutional
investors yesterday, especially pension funds and state firms, to
help revitalize the local stock market that had been badly
affected by the monetary crisis.

Chairman of the Capital Market Supervisory Agency, I Gede Putu
Ary Suta, said that the market needed more local support after it
had lost 23 percent in market capitalization since mid-July.

Nevertheless, Putu acknowledged that local investors had taken
a significant role or even lead in stock trading activities,
thanks to the emergence of local mutual funds.

"The President has demanded that special attention be given to
boost the role of other players, especially pension funds and, if
possible, state companies, so that our market can become more
active," Putu said after meeting with the President together with
Director General of State-owned Companies Bacelius Ruru.

The Jakarta Stock Exchange's (JSX) market capitalization was
about Rp 200 trillion (US$56.34 billion), Putu said, adding that
it had gone down from a high of Rp 260 trillion in early July
because of the fall in share prices that followed the fall of the
rupiah.

Indonesia's stocks and currency have been hard hit in a
Southeast Asian currency turmoil that was sparked by the de facto
devaluation of the Thai baht on July 2.

The JSX composite index has lost 27.81 percent since July 9
when the index reached its highest of 740.83 points, while the
rupiah has lost about 30 percent of its value since July 1.

Putu said the JSX composite index lost only 14 percent between
the end of last year and Sept. 30 -- the second lowest loss among
Southeast Asian stock markets.

Nevertheless, average daily turnover remained stable at about
Rp 500 billion, he said.

"We always monitor its development, and we hope that policies
made by the government will positively impact trading
activities," Putu said.

Recently, the government scrapped the foreign ownership limit
of 49 percent of local companies' listed stocks.

Putu added that his agency was preparing regulations to
maintain the attractiveness of local capital markets.

"We are continuing to make an effort to convince investors,
foreign and local, to continue to play in our capital market," he
said.

Meanwhile, Bacelius Ruru said the President told him that
potential state firms with good prospects must be prepared to
enter the stock market.

"State firms going public would not only give a boost to the
local stock market but also improve their own performance and
provide fresh funds to the government to repay its short-term
debt," Ruru said.

Ruru said that there were 164 state companies with total
assets of Rp 374 trillion, and they should be encouraged to
contribute more to the economy's development.

Five state companies listed on the JSX -- cement producer
Semen Gresik, tin-mining company Tambang Timah, domestic
telecommunications giant Telkom and international
telecommunications company Indosat and Bank BNI -- accounted for
about 25 percent of JSX market capitalization, he said.

Ruru declined to say which state companies would likely go
public soon. (rid)