Stock index rise unusual: JSX

Stock index rise unusual: JSX

JAKARTA (JP): The Jakarta Stock Exchange (JSX) is
"investigating" last week's market activities, as an "unusual"
trading pattern led to a sharp 4.8 percent gain in the JSX
Composite index.

JSX director Harry Wiguna said that last week's trading ran
contrary to normal activities with most gains in the index being
made during the last minutes of trading before closing time at 4
p.m.

"We're looking into it (last week's trading) as we always do
when we find something unusual," he told The Jakarta Post on
Monday.

He refused to use the term "investigating" for the process,
saying they were still at the stage of examining the buying and
selling activities of securities companies to filter out
suspicious trading patterns.

"It'll take about one or two weeks before we have some
concrete results from the initial inquiry," he added.

"If our initial inquiry indicates something's wrong, we'll
proceed with a full investigation," he said without elaborating.

The JSX index's upwards trend began two weeks ago, led by
gains in blue chip shares. The index closed last week's trading
at 437.59, up from 417.56 in the previous week, and 398.81 the
week before.

Data from Bloomberg shows that for the trading period between
May 25 and June 25, the JSX index was the best performing index
among global stock markets, with a gain of 12.74 percent.

This ran contrary to the rupiah's nondescript performance
against the U.S dollar.

A breakdown of the daily stock trading pattern also reveals
that most of last week's gains were made in the last 30 minutes
before closing time, with some even during the very last minute.

Several securities firms, both state-owned and private ones,
snatched up the shares of heavily weighted blue chips companies
that were capable of dragging the JSX index up.

Among the targets were state-owned telecommunications firm PT
Telkom Indonesia, whose rise and fall influences the JSX index
movements. Historical data shows Telkom's share performance
closely correlates with that of the JSX index.

Other targets were the second largest company listed on the
exchange, cigarette firm PT Gudang Garam, and state owned long
distance operator PT Indosat, another market heavyweight.

According to analysts, such trading patters smacked of
interference, as buying the blue chips at the last minute ensured
the index remained strong when trading closes.

Trying to boost the index too early only invites profit-taking
from other investors that can send the index plunging towards
closing time.

Most stock analysts had attributed the market recovery to
investors' confidence over the country's political outlook.

But investment analyst Erwin S. Widjojo of PT Indovest
Securities didn't rule out government interference as being
behind the trend.

Propping up Telkom and Indosat's shares, he said, would serve
the government's plans to divest its stake in the two companies.

Interference could have made it appear that the two companies'
shares were being actively traded and promising, he explained.
(bkm)