Stock index likely to keep rising
The Jakarta Post, Jakarta
The Jakarta stock market index, which increased 3.3 percent last week, is predicted to continue its upward charge this week, cashing in on favorable economic sentiments.
Extending the current rally are conducive prospects for economic growth, following on an upbeat Central Statistics Agency (BPS) report on economic growth, and announcements of companies' third-quarter earnings, stock analysts said.
The Jakarta Stock Exchange composite index last week closed at all time high of 965.22 points, a 3.3 percent increase from previous week's closing, with daily volume averaging 2.11 billion shares worth Rp 1.7 trillion (US$187.7 million).
"I think the (upward) trend will continue, although perhaps not as high as 3 percent like last week," Dodi Prawira of Bapindo Sekuritas told The Jakarta Post on Sunday, citing better growth prospects for the economy.
The country's gross domestic product grew faster at 5.03 percent in the third quarter of the year compared to the same period in 2003, BPS reported on Friday, signaling the economy's potential to exceed the government full-year growth target of 4.8 percent.
Echoing Dodi's sentiments is Lorensius Chrisbiantoro of BCI Securities. "Technically, the trend for next week should remain upward as the overall macroeconomy continues to improve," Lorensius told AFP over the weekend.
Earlier this month, the World Bank also revised its forecast for this year's growth from 4.5 percent to 4.9 percent as a result of, among others factors, strong domestic consumption, and signs of investment recovery in the first semester, as well as a peaceful general election.
The economic outlook has been also supported by the dollar's slide against most other currencies, which could in turn keep inflationary pressure at home in check and provide room for the central bank to continue to maintain a low interest rate environment.
"However, there are shares that have already reached their fair value and thus there is little chance of sharp increases (in share prices), such as (telecommunication giants) Telkom and Indosat shares.
"That's why I think the increase in the index this week will be less than 3 percent," Dodi said.
Both Dodi and Lorensius agreed that investors, including deep- pocketed foreigners who have been the driving force behind the index's rise in the past weeks, are now aiming to break the 1,000-point benchmark before the end of the year.
According to data from the Jakarta Stock Exchange, foreign investors became net-buyers last week for the fifth straight week.
A net Rp 7.28 billion worth of shares was bought by overseas investors, a sharp increase when compared with Rp 1.71 trillion the week before, it said.
Last week's robust performance extended the solid showing in the previous month, which according to a survey from dollarDEX.com, 6.1 percent raise in October made the country the best market performer in Asia.
Among others, shares of top banks would be the most-sought stocks and will be the engine to driving the index up, Dodi said.
"Banking shares, such as Bank Niaga, Mandiri, and perhaps BRI have a good chance of increasing," he added.