Stock market expected to tumble further this week

Stock market expected to tumble further this week

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
are expected to fall further as worries about President
Soeharto's health and a further drop in the rupiah would continue
to dampen the buying mood.

Securities analysts said the cancellation of Soeharto's trip
to attend the 30th commemorative summit of the nine-member
Association of Southeast Asian Nations (ASEAN) in Kuala Lumpur
would likely remain the major concern of most investors.

Investors were still worried about the President's health
despite the fact that the President was well and had several
meetings at his residence with a number of cabinet ministers, the
analysts said.

The sharp drop in the rupiah early last week would still
affect the buying mood as most investors would remain skeptical
about the future of the Indonesian currency, they said.

Minister/State Secretary Moerdiono said last week that the
President's plan to attend the summit was canceled after doctors
had advised the President to continue resting at home.

"I announced a few days ago that the President was planning to
attend the ASEAN informal summit. However, after a routine
checkup, the presidential team of doctors advised him not to go
on any long journey for the time being," Moerdiono said.

The concerns over the President's health shadowed trading
activities on the local stock market and the rupiah last week,
with most shares losing ground in moderate trading.

On Friday alone, after the announcement of the President's
trip cancellation, the JSX Composite Index nosedived 30.26 points
to a four-year low of 365.85 points while the rupiah broke the
5,000 barrier to new record low of 5,225 against the greenback in
the spot market before settling at 5,120/5,220 on Jakarta market.

"The market has lost confidence in the rupiah and stock
market. Fundamentals do not count any more as it has become a
psychological game," an analyst with a local securities company
said.

"The unchartered fall of the rupiah against the U.S. dollar
put more pressures on the stock market this week," a dealer with
a joint venture securities said.

Fadjar Limin Sutandi, head of research at Sigma Batara, said a
combination of the President's health, weak regional markets and
a persistent fall of the rupiah against the dollar would
certainly make stock prices on the JSX dive further into unknown
territory this week.

"The Jakarta stock market is facing a double blow. The
President's health and the weak regional market," he told The
Jakarta Post last week.

He said most foreign investors, which previously accounted for
70 percent of transaction on the JSX, had already left the market
in the face of a further weakening of the rupiah.

He said that these investors were expected to enter the stock
market again in the second quarter of next year to benefit the
undervalued stocks.

"We can expect foreign investors to reenter the market only in
the second quarter of next year," he said.

The decline of stock prices this week was also attributed to
the fact that many market players were preparing for their year-
end holiday, stockbrokers said.

A senior analyst with a joint venture securities firm who
asked not to be identified shared Fadjar's view, saying
increasing worries about the President's health coupled with the
crippling rupiah, which has hit a series of record lows,
contributed to a decline on the stock market this week.

"The fact that the President is not going to attend the ASEAN
Summit in Kuala Lumpur makes the public even more worried about
his health," the analyst said.

He said that the public's worries about the President's health
indicated that the ongoing financial turmoil was not merely a
financial problem.

"The crisis is not an economic problem anymore but a political
problem too," he said.

"To overcome that, economic and political measures are
needed,' he said.

The JSX Composite index closed down 48.92 points to 365.85
last week.

The average daily turnover was 429.8 million shares changing
hand on the regular market last week compared to 547.40 million
shares in the previous week.

The average daily value was Rp 437.51 billion last week
against Rp 265.94 billion in the previous week.

Cigarette maker Sampoerna fell Rp 600 to Rp 4,000, while
competitor Gudang Garam slipped Rp 600 to Rp 4,000. Bank
Internasional Indonesia slipped Rp 75 to Rp 350, Bank Negara
Indonesia fell Rp 75 to Rp 475 and Bank Dagang Nasional Indonesia
lost Rp 50 to Rp 350. (aly)