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)