Speculative JSX buying expected to continue

Speculative JSX buying expected to continue

JAKARTA (JP): Analysts are forecasting that domestic investors
will continue their speculative buying on the second-liner and
third-liner shares listed on the Jakarta Stock Exchange (JSX)
this week.

"Domestic investors' activities are likely to coincide with
the expected return of foreign fund managers on big-cap stocks
because prices of those stocks have been stagnant during the last
few weeks," Dandossi Matram from the Jakarta Brokers Club told
The Jakarta Post over the weekend.

A senior floor trader with a foreign brokerage, Nadjib Usman
believes the market will be marked by speculation this week.

According to Nadjib, speculation, which is typical for short-
term investment strategy, is usually boosted by rumors of
takeovers or bonus share issues.

"Some speculators may even try to gain profits on certain
stocks for dividends only," Nadjib told the Post.

He said that the plans of many companies to hold annual
shareholder meetings soon is another reason for local investors'
active participation because they are also looking for positive
dividend policies.

"I think investors want to take every chance to gain profits,"
Nadjib said.

Dandossi noted that local investors have become more
responsive to stock price movements since the automation of the
JSX's trading system.

"The system allows them to carefully follow individual stocks.
They sometimes decide to buy or sell immediately following any
rumors on those individual stocks," Dandossi said.

The two analysts said that last week's 2.8 percent increase in
JSX share prices was mainly supported by local speculative buying
although the return of foreign funds on Gudang Garam was also
influential.

Gudang Garam's share price rose by nearly Rp 4,000 (US$1,7) to
close last week at Rp 34,300 on the company's plan to split its
stocks this week.

The JSX composite index closed the week 17 points higher at
624.53, as compared to an increase of only one point two weeks
ago.

Transactions

The JSX booked transactions of Rp 1.7 trillion last week, with
563 million shares changing hands.

Foreign buy transactions were Rp 1.16 trillion, while the sell
transactions were Rp 1.17 trillion.

The prices of 104 stocks advanced and 64 declined, while the
other 68 were unchanged.

Dandossi said that pulp and paper stocks were given upward
momentum by an upward trend of pulp and paper prices.

Data from the JSX showed that the price of Inti Indorayon
shares was up 18 percent to close at Rp 2,850 last week, with
20.1 million shares changing hands at a total value of Rp 51.1
billion.

Indah Kiat was second in the top ten stocks in terms of volume
with 24.5 million shares traded at Rp 59.3 billion.

Another paper producer, Suparma, was also among the top ten
stocks in terms of value with 16 million shares traded.

Japfa (Java Pelletizing Factory Ltd.) Comfeed Indonesia, a
producer of copra oil cake pellets and coconut oil, led the top
ten stocks in terms of volume with 48 million shares traded. Its
share price rose 12 percent to close at Rp 1,875.

Dandossi said that Japfa has been actively traded in the last
two weeks, following the announcement that the company has signed
an agreement to supply its products to McDonalds.

The inactive pure tobacco cigarette maker, BAT Indonesia, was
up 15 percent to Rp 11,500 at the week close, boosted by the
management's decision to distribute dividends of Rp 1,520 per
share.

Dandossi, however, foresaw that the JSX will not see
significant participation from foreign investors because the U.S.
Federal Reserve may increase its interests rates.

"A survey on Wall Street says that the first quarter of this
year saw a significant decline in the funds allocated to equity
markets," he said.

"Therefore, I am still doubtful of new inflows of foreign
funds," he added.

The top ten stocks in terms of transaction value last week
were Lippo Bank (Rp 104 billion), HM Sampoerna (Rp 102 billion),
Japfa (Rp 96 billion), Bank Internasional Indonesia (Rp 79
billion), Gudang Garam (Rp 61 billion), Telkom (Rp 60 billion),
Indah Kiat (Rp 59 billion), Inti Indorayon (Rp 54 billion), Duta
Pertiwi (Rp 51 billion) and Anwar Sierad (Rp 50 billion). (08)