Stock market performs much better this year

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.