Stock index may falter as election euphoria fades

Stock index may falter as election euphoria fades

The Jakarta Post, Jakarta

Jakarta stock prices are expected to further consolidate this
week as the bullish sentiment stemming from last week's smooth
presidential election has already been discounted by the market,
according to stock analysts.

Unless fresh leads are given to the market, the Composite
Index is expected to be come under pressure and could even fall
below the 800 barrier, Arwani Pranadjaja of Mandiri Sekuritas
said over the weekend.

"Even last week, when the index was slightly up, it was mainly
because of last-minute buying, which means than the underlying
sentiment in 'real-time trading' was not that good," Arwani told
The Jakarta Post.

Last week, late buying on selected blue chips and secondliners
helped reverse the downward trend of the previous three days
after the index reached an all-time high on Tuesday, the day
after the election took place.

Thanks to the late buying, the index closed the week 0.6
percent higher at 819.82 points. On Tuesday, it rose to as high
as 829.57 before closing at 824.86 points. The trading volume
averaged 1.90 billion shares valued at Rp 1.1 trillion (US$120
million), compared to 1.423 billion shares at Rp 1.15 trillion
the previous week.

Arwani pointed to three reasons behind his rather gloomy
prognostication: the vulnerable rupiah, absence of fresh news
from Susilo Bambang Yudhoyono -- poised to be the next president
-- and the seemingly inexorable rise in global oil prices.

The local currency closed last week at Rp 9,115 per U.S.
dollar, a 0.9 percent drop against the previous week's close.

As for the oil price, which is currently hovering at more than
$45 a barrel, many fear that it could hit $50 a barrel, which
could create shockwaves on financial and capital markets around
the globe, including Indonesia, Arwani said.

"As for domestic factors, while the lineup of SBY's Cabinet
could well improve market sentiment, I do not think he will
publicly announce the lineup before October," he said, referring
to Susilo.

The new government is to be sworn in by Oct. 20.

Another analyst also predicted that the index would falter as
the market applied a wait-and-see stance. "The political euphoria
is over, everything is now a waiting game," Kim Eng Securities
head of research Baradita Katoppo told AFP.

One positive factor could come be the planned stock split on
Sept. 27 by Telkom, the nation's largest telecommunication firm
and the firm with the largest market capitalization on the
Jakarta bourse.

"It will definitely help. But I do not think it will affect
the overall sentiment," said Arwani.