Stock market rebounds on bargain hunting by locals

Stock market rebounds on bargain hunting by locals

The Jakarta Post, Jakarta

Bargain hunting by mostly local investors meant shares on the
Jakarta stock market rebounded on Friday after posting losses for
consecutive days following investor reservations about the lineup
of economic ministers in the new Cabinet.

The Jakarta Composite Index ended higher by 1.99 percent or
16.605 points at 850.774 on volume of 1.34 billion shares valued
at Rp 1.12 trillion (US$124 million). Gainers led losers 103 to
21, with 67 stocks unchanged. Most markets in Asia also ended
firmer.

Several analysts said there had been no significant news in
the bourse and said the rise was mainly caused by bargain hunting
in selected bluechips after their shares become cheaper following
losses in previous trading sessions.

However, some analysts believed the surge in the trading was
triggered by intervention from local institutional investors,
which poured money into the bourse and bought up several
bluechips in a bid to raise investor confidence in the market.

"I am suspicious the rise in the bourse was created by certain
local investors in order to create the assumption the market has
warmly welcomed the new economic ministers," stock analyst
Roberto Pardede of Mandiri Securities said.

Roberto said the movement of the index was unusual, with the
market suffering a further decline in the morning session and
later recovering.

At 10.37 a.m., the index declined to 833.928 and went lower to
832.822 at 11:06 a.m., before leaping to 835.556 from 11.31 a.m.
until the end of trading.

Investors have been spooked by the economic ministers in the
new Cabinet, which the market perceives as unwilling to push
through badly needed economic reforms.

Minister of Finance Jusuf Anwar, a veteran finance ministry
bureaucrat, is considered a figure with close links to past
governments who would not have the drive or the inclination to
make sweeping changes in economic management.

Jusuf was the secretary-general of the Ministry of Finance
during the notoriously corrupt Soeharto era in 1993.

Meanwhile, Coordinating Minister for the Economy Aburizal
Bakrie is a business tycoon who is also a Golkar politician.
Several analysts have criticized him for his companies' poor
record in repaying huge debts to international creditors after
the Asian financial crisis in late 1997.

Many analysts said they had believed professionals would be
selected for the job based on the input from politicians. They
now believed the ministers were selected after horse trading in
the political elite to protect vested interests.

However, Indonesian Economic Recovery Committee (KPEN)
chairman Sofjan Wanandi defended Susilo's decision, saying the
new economic ministers formed a "pro-business economic team".

"We hope that Aburizal, who leads the team knows what the
business community wants (to occur) to resolve the economic
problems, including how to bring back investment," Sofjan said.

"I realize there are questions about Aburizal, but I think he
will relinquish his business interests and quit his positions at
Bakrie Group to concentrate on his new job," he said.

Sofjan, who is also the chairman of the Indonesian Employer's
Association (Apindo), said it and the Indonesian Chamber of
Commerce and Industry (Kadin) would support the new Cabinet.