Stock market likely to slide further
Stock market likely to slide further
JAKARTA (JP): Shares prices on the local stock market are
likely to slide further this week as profit taking may dominate
the trading.
Securities analysts said on Saturday that the absence of any
fresh leads would also push most investors to sideline the
trading floor.
An institutional sales broker with Trimegah Securindolestari
said, "I think the general tone is that stock prices will
continue to decline due to lack of positive impetus."
BNI Securities' head of research, Adrian Rusmana, said that
uncertainty in the country's political environment was marked by
endless antigovernment rallies and would continue to scare
investors away from the country's shattered market.
He said that lack of foreign investors' confidence in the
government would prevent them from placing bulk portfolio
investments here.
"Since the foreign investors' confidence is not restored yet,
they will continue to dump the stocks to cash in profits," he
said.
Mashill Jaya Securities' head of research, Edhi S Widjojo,
shared Adrian's view, saying that the rise of stock prices in
the past few weeks was driven by external factors rather than by
domestic factors.
He said the U.S. interest rate cut by 0.25 percentage basis
points to 4.75 had triggered most investors to enter the market.
"The bullish trend resulting from the interest rate cut is
over, and it is now the time for investors to take profits," he
added.
Stock analysts and brokers said the upward trend in the
regional market, which became one of the important factors in
pushing up prices of local stocks last week, has also lost its
strength.
A stronger rupiah could incite active trading but such a
possibility would be marginal because Indonesia's currency, which
gained a strong footing early last week, would also likely to
lose its power, they said.
The rupiah, which hit an eight-month high of 7,150 last
Wednesday, slid back to 7,800 on Thursday and to 7,850 on Friday
following a controversial statement by the country's senior
economic minister Ginandjar Kartasasmita. He said that the ideal
level of rupiah-dollar exchange rate would be between 7,000 and
8,000 to maintain the competitiveness of the country's exports.
Unlike other analysts, Edhi said he believed share trading
would be much determined by the rupiah direction rather than
other factors.
"So if the rupiah gains ground, then the shares would gain a
footing," he said.
The analysts said that a weaker rupiah, which was expected to
hover around 7,900 this week, would force investors to sell
stocks of companies with huge foreign debts.
However, Adrian said that a weaker rupiah could provide an
opportunity for several stocks, especially those of resources-
based companies.
He said companies which are also listed overseas could benefit
from the lower rupiah, such as state-telecommunications firm PT
Telkom, international call operator PT Indosat and mining firm PT
Tambang Timah.
The weaker rupiah would make their stocks overseas cheaper and
this could trigger active trading, he said.
The Jakarta Stock Exchange Composite Index ended 7.1 percent
lower to close the week at 313.41 from 337.58 the previous week.
Daily average turnover, however, rose to 259.76 million shares
changing hands last week compared to 222.32 million shares the
previous week.
Daily average transaction values rose to Rp 290.38 billion
last week from Rp 261.48 billion the previous week. (aly)