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.