Stock index rebounds to cross the 300 barrier

Stock index rebounds to cross the 300 barrier

JAKARTA (JP): The bulls were out in force on Friday at the
Jakarta Stock Exchange (JSX) as share prices rose 5.6 percent,
and the rupiah maintained its own rally by holding steady at the
9,000 level against the U.S. dollar.

Stockbrokers said foreign fund managers basked in the rupiah
gains and bullish regional market to buy undervalued large-cap
stocks, driving the main price index to pass the 300 boundary.

"Trading is good today as most foreign investors took the
momentum of a strong rupiah and bullishness in the regional
market to buy cheap blue-chip stocks," an institutional sales
broker with Trimegah Securindolestari said.

Brokers said most foreign brokerage firms were placing large
buying orders on many large capitalized stocks like
telecommunications firms PT Telkom and PT Indosat and cigarette
giant PT Gudang Garam.

State-controlled Telkom's stock price rose Rp 350 to close at
Rp 1,950 on 73.06 million share transactions, and state-owned
Indosat shot up Rp 1,800 to Rp 7,200 on 4.38 million shares.

Gudang Garam inched up Rp 100 to Rp 6,850 on 3.47 million
shares traded and competitor PT HM Sampoerna slid Rp 75 to Rp
2,925 on 3.86 million shares.

The JSX Composite Index rose 16.29 points to close at 304.84
for the 5.6 percent rise.

Trading turnover totaled 526.24 million shares valued at Rp
487.31 billion (US$54.1 billion).

Gainers led losers by 56 to 26, with 86 stocks unchanged.

Stockbrokers said the main price index hit an intraday high at
311.96 points in the morning, but then slipped in the afternoon
because some investors sold selected stocks in profit taking.

The research head of Vickers Ballas Tamara, Noraya Soewarno,
predicted the bullish sentiment in the local market would be
short-lived.

She noted that such a sudden rise in the price index did not
reflect the recovery of investor confidence in the country's
battered market.

"The rise in the stock price will not last long because
investors were only reacting to positive sentiment on the
rupiah," she said.

Brokers also attributed the increase in stock prices
to the investor response to the interest rate in the benchmark
Bank Indonesia one-month promissory notes (SBIs) to 60.03 percent
on Wednesday from 64.74 percent the previous week.

The research head of Panin Sekuritas, Anton Karlam, said that
interest rate cuts would certainly have a positive impact on
Indonesian companies currently blown in two directions by high
interest rates and foreign exchange losses.

A relatively calm political situation at home following the
smooth proceeding of the Megawati Soekarnoputri-aligned
Indonesian Democratic Party (PDI) congress in Bali was another
contributant to the sharp increase in stock prices, he said.

Unlike the soaring stock prices, the rupiah closed relatively
unchanged at 9,050 against the American dollar after breaking
through several psychological barriers in the last three days.

Friday's close was slightly higher than its Thursday's close
at 9,100.

Currency dealers said the rupiah, which was traded in very
moderate dealings, failed to make headway toward 8,000 as some
market participants took profits ahead of the weekend.

"But the general tone is that most offshore operators are
really scared to build any long dollar position due to talk of a
capital control system," said Ferdy Khouw, chief treasurer of
Citibank Jakarta.

Despite repeated denials by the government, market players
continue to speculate that it will eventually impose the capital
control system to prop up the rupiah and to allow it to cut
domestic interest rates. (aly)