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.