Stock market performs much better this year

Dadan Wijaksana, The Jakarta Post, Jakarta

The Jakarta Stock Exchange fared better this year with market capitalization -- the total value of stocks traded in the bourse -- increased by 10.5 percent compared to last year, due largely to a steady improvement in the key areas of the domestic economy.

The Capital Market Supervisory Agency (Bapepam) said that the improving domestic economy had pushed up share prices and increased the number of listed shares, both of which helped put the exchange's market capitalization at Rp 267.5 trillion (about US$28.3 billion).

It was higher than last year which stood at Rp 239.3 trillion, according to Bapepam in its year-end reports released on Friday.

This year's improved market performance was also reflected in its average daily transaction value which reached Rp 493.1 billion, higher than last year's average of Rp 396.4 billion.

Bapepam also said that the improvement in the domestic stock market should have moved at a faster pace had it not been affected by various problems resulting from both internal and external factors.

From the external front, the local market had to weather the massive storm following revelations of a number of bookkeeping scandals in the U.S.

The high-profile scandals, which involved giant companies such as WorldCom, Enron and Merck, had not only rocked the U.S. market but also shocked the business world and hurt many investors around the world, including Indonesia.

This added to the pressures resulting from the continued shaky economic performance in the world's major economic powers such as Japan and the U.S., which signaled that the world economic recovery was still a long way off.

Meanwhile, the devastating Oct. 12 terror attacks in the country's top tourist spot, Bali proved to be the hardest blow for the local market to deal with.

It has been devastating for the tourism sector, but what's more harmful was that it hampered efforts to revive the already dwindling confidence on the part of investors.

The result was so damaging that the Jakarta Composite Index was dragged down to record lows on Oct. 14. It closed the trading day at 337.47 points, the lowest in four years.

But, the market managed to survive all the scares, and in fact, Bapepam said, it was heading into next year on an optimistic note.

Based on assumptions of continued progress in macroeconomic indicators, the agency predicted an even brighter outlook for 2003, which includes a rise in the exchange's average daily transaction value to Rp 600 billion.

"The number was based on various assumptions, such as a 4.5 percent economic growth, 9 percent inflation and the rupiah exchange rate of 9,000 against the U.S. dollar," Bapepam said, adding that it also targeted around 40 new companies to be listed in the bourse.

The market saw this year as many as 22 companies enter the bourse.

The 2003 state budget assumes an economic growth of 4 percent, inflation of 9 percent and the rupiah's exchange rate of 9,000 per dollar.