Stock market braces for uncertain days ahead

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)