Stock hits another record on rise in bluechips

Rendi A. Witular, The Jakarta Post, Jakarta

The Jakarta stock index skyrocketed again on Friday to another record level in the nation's history, lifted by selected banking bluechips following a successful placement of the government's minority shares in four privately controlled banks.

The Jakarta Composite Index ended up 5.035 points at 794.467, with a volume of 10.71 billion shares worth Rp 3.11 trillion (US$370 million).

Stock analyst Fendi Susiyanto from BNI Securities said the successful divestment of some of the government's remaining shares in four banks, coupled with a stable macroeconomic indicators and a positive outlook, had helped lift the Index higher.

"The sales have triggered a rally in the stock market since Thursday, as investors are confident over the solid performance of the banks," said Fendi.

The government on Thursday sold 7.85 percent in Bank Danamon, 1.48 percent in Bank Central Asia (BCA), 5.65 percent in Bank Niaga and 1.99 percent in Bank International Indonesia (BII).

According to Fendi, other index movers which took advantage of the positive sentiment, were Bank Rakyat Indonesia (BRI), the country's fourth largest bank, state-owned telecommunications company PT Telkom, and construction company PT Bakrie & Brothers.

BRI ended up by Rp 50 to Rp 1,650, Telkom by Rp 50 to Rp 7,700 and Bakrie by Rp 15 to Rp 90.

Fendi said shares in Bakrie surged suddenly as there was a rumor the company planned to acquire a 51 percent stakes in gold and copper miner PT Freeport Indonesia. But Bakrie later denied the rumor.

Elsewhere, regarding the Index outlook for next week, Fendi said there was a growing optimism that the index could reach the psychological level of 800 over a bulk of positive issues, such on government's plan to start issuing the awaited global treasury bonds and on earning reports of several companies.

"I expect the Index to trade between 790 and 812 next week, because there is more positive sentiment than negative," said Fendi.

He explained that one of the negatives was the anticipation of the electoral campaign, to begin in March. Many investors fear that the campaign might turn ugly, as has happened in previous elections.

Despite its limited direct impact on the country's overall economy, the rally in the stock market serves as a measure to gauge investor confidence in the country's economy.

As for companies, the stable and high index figure can be an effective alternative for raising funds because with the current surge in the Index, companies planning to sell their shares on the stock market will obtain higher proceeds.

Elsewhere, the Indonesian rupiah could not get energized from the surge in the Index, as it ended the day slightly lower against the U.S. dollar at Rp 8,437 from Rp 8,430 on Thursday, as the greenback moved higher against other global currencies.