Stock index likely to keep rising

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.