Stock market braces for uncertain days ahead

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) are likely to reel from more turbulent days this week as investors remain jittery over the country's social catastrophe, stock analysts said.

The anarchic violence hammering Jakarta and surrounding towns, which has resulted in the destruction of many shops and buildings, will likely scare investors away.

"I think the market sentiment will remain bearish as investors are still terrified by the country's social situation," one analyst with a joint venture securities firm said.

Two days of riots, looting and arson hit Jakarta and surrounding towns following the shooting of four Trisakti University students at a demonstration on Tuesday last week, bringing all business activities in the capital to a standstill.

Head of research at Pentasena Securities Mohammad Syahrial said that the market would be closely watching this week for the government's action to end the riots, the country's worst social unrest in more than three decades.

"Market activities will depend on the way the government handles the situation," he said, adding that a further escalation of tensions would cause more distress to the country's already weak economy.

"If social stability is restored, there could be some business activities in the market," he said.

Thousands of foreigners have fled riot-torn Jakarta in the past few days because of fears over the unrest, which has caused the deaths of at least 165 people, mostly trapped in the burned malls.

Analysts said trading activities in the country's ravaged bourse would therefore worsen because most foreign investors had joined those fleeing.

"Do not expect the fresh foreign capital would to return to the country for a while," he said.

"I think the index will go down further," Pentasena's Syahrial said.

But he warned that certain selective investors would make speculative trading on the dollar valuations stocks like PT Telkom, Indosat and Tambang Timah this week to benefit from their price differences in the local and overseas markets.

The three stocks, whose combined market capitalization account for about 35 percent of the Jakarta Stock Exchange, are also crosslisted on the New York and London stock exchanges.

Syahrial also said that trading activities in the local market would largely depend on the movement of the rupiah against the U.S. dollar this week.

"But there is no reason for the rupiah to strengthen against the American greenback this week," he said adding the hammered rupiah might even fall further against the dollar as there is no signs yet indicating that the ongoing unrest will cool down.

As most banks closed on Friday last week, the currency was last quoted in a wide range between 10,500 and 11,500. The local currency was closed at 9,200 the previous week.

The JSX composite index declined 6.61 percent or 28.74 points to 405.93 during the week from 434.65 the previous week.

Total average daily turnover declined to 261.92 million shares changing hands last week from 360.14 million the previous week.

Total average transaction value declined to Rp 277.35 billion (US$27.73 million) last week from Rp 376.67 billion the previous week.

Several blue-chip stock prices closed lower last week. Astra International shed Rp 175 to Rp 1,050, Gudang Garam slid Rp 1,375 to Rp 7275, HM Sampoerna fell Rp 600 to Rp 3,725, Bimantara Citra fell Rp 275 to Rp 375 and toll-road operator Citra Marga Nusaphala Persada (CMNP) shed Rp 125 to Rp 425.

There were only four trading days last week as the bourse was closed on Monday in observation of Buddha's Day of Enlightenment. Although the JSX management did not close the local bourse on Friday last week, there was no significant trading as most brokers did not come to the trading floor after brokerage firms and securities companies temporarily closed their activities last week. (aly)