Stock investors to cash in gains, rupiah to strengthen

M. Taufiqurrahman The Jakarta Post Jakarta

Profit-taking is expected to dominate transactions on the Jakarta Stock Exchange this week as investors try to cash in on recent gains, an analyst has said.

But overall sentiment would remain positive on the back of good financial results published by listed companies, said analyst Prasti Rindrawati on Sunday.

"I think there will be a slight rise in the (Jakarta composite) index," she told The Jakarta Post.

After three days of trading, the Jakarta Stock Exchange composite index closed on Wednesday at 467.939, down 1.695 points, or 0.36 percent, from the end of the previous week. The market was closed on Thursday and Friday for a public holiday.

Prasti said strong annual earning reports announced by some listed companies had heartened investors.

"This is creating a positive sentiment in the market," she said.

Blue-chip companies such as telecommunications company PT Telkom, media and broadcasting leader PT Bimantara Citra, mining company PT Aneka Tambang and retail giant PT Matahari Putra Prima have recently made public their annual financial performance.

The analyst said that the country's positive macroeconomic outlook had also given market players every reason to be optimistic.

"The impending military conflict in Aceh is something investors will watch closely in the most immediate future, but I think the (stock) market has begun to be less susceptible to political factors," she said.

Turning to the currency market, currency analyst Farial Anwar said there was a strong indication that the rupiah would strengthen on the expectation of more capital inflows as investors purchased local assets.

"I am sure that Bank Indonesia (BI) will soon give a green light to the Bank Danamon takeover, and regardless of whether the payment is to be made in dollars or rupiah, there will definitely be an increase in the supply of dollars in the next week or two," Farial said, referring to the recent sale of Bank Danamon to a consortium jointly owned by Deustche Bank and Singapore-based Temasek holding company.

He told the Post that unless there were confounding statements from government officials the chance of the rupiah strengthening against the greenback was greater.

"The newly elected governor of Bank Indonesia is a noncontroversial figure and he has made the right step by giving market-friendly statements about the local currency," he said, referring to last week's election of Burhanuddin Abdullah as the new leader of the central bank.

The rupiah would also benefit from the weakening of the U.S. dollar, which has been on a steady decline in the past two years, he said.

"There is nothing to indicate that the U.S. economy will improve soon," he said.

He said the market would be more concerned with domestic issues. If the conflict in Aceh were resolved swiftly, there would be no significant threat to the stability of the rupiah.

"If all goes well, I guess the rupiah will be trading this week at about Rp 8,425 to Rp 8,500 to the dollar," he said.

The rupiah strengthened last week to Rp 8,425 to the dollar, compared with Rp 8,555 the week before.