Stock index could reach 410 this week: Analyst
Stock index could reach 410 this week: Analyst
Dadan Wijaksana, The Jakarta Post, Jakarta
The Jakarta Composite Index should hover above the 400 level
this week amid positive market sentiments and an expected
abatement of utility price hike protests, according to an
analyst.
"The index will be moving back above the 400 level this week
with a good outlook for top stocks. It could even reach 410
points provided there are no 'surprises' that could fuel further
street protests," Ferry Latuhihin, a stock and currency analyst
at Danareksa Securities, said on Sunday.
As in previous weeks, he added, a rise in the stock index
would come from active trading in blue chips.
Last week, a rebound in most of the top companies pushed the
index to 401.65 points, 0.5 percent higher than its close the
previous week.
Street rallies against the recent increase in fuel prices and
electricity and telephone rates are expected to fade after the
government decided last week to postpone the phone rate increase,
and announced it was considering revising the increase in fuel
prices and electricity rates.
Street protests have become daily occurrences since the
government unveiled the simultaneous utility price hikes early in
January. There were fears the protests could turn violent,
creating nervousness among stock traders.
Ferry said the postponement of the phone rate increase would
not damage the financial performance of state-owned
telecommunications company PT Telkom, whose shares were under
pressure toward the end of last week.
"It won't have much of a change on the company's financial
balance sheet. Telkom will still be able to perform well, coupled
with the fact that it (the hike) was only delayed, not canceled,"
he said.
In last week's trade, the daily volume averaged 261.24 million
shares worth Rp 299.9 billion (US$33.79 million), compared to
242.5 million shares worth Rp 274.2 billion last week.
In the currency market, a prolonged bearish mood toward the
U.S. dollar and strong support from Bank Indonesia will keep the
rupiah hovering below the 8,900 level this week, Ferry said.
"I see no reason for the rupiah to decline; at the least it
will stay at its current level this week, which is stabilizing in
a narrow range of 8,850-8,900," he said.
His forecast was based on the recent weakening of the dollar
against regional currencies, based on concerns over the U.S.
economy and a possible war with Iraq.
The rupiah ended last week at 8,875 per dollar, slightly
stronger than its 8,918 close the week before.
On the domestic front, the upcoming Jan. 21 and Jan. 22
Consultative Group on Indonesia (CGI) meeting could help lift the
rupiah.
The CGI is a grouping of the country's traditional foreign
lending countries and institutions, which are expected to provide
between $2.4 billion and $2.8 billion in fresh loans to Indonesia
to help plug the 2003 state budget deficit.
"The central bank, which has been very supportive of the
rupiah, will also be a factor for the local unit's movement,"
Ferry said, adding that with some $31.4 billion in its
international reserves, Bank Indonesia is more than capable of
guarding the rupiah.