Stock market, rupiah looking better: Mar'ie

Stock market, rupiah looking better: Mar'ie

JAKARTA (JP): Minister of Finance Mar'ie Muhammad predicted
yesterday that Indonesia's stock prices would rebound and the
rupiah would continue to strengthen next year.

Speaking after announcing new local stock market rules, Mar'ie
said the crisis sweeping across the region had made overdose
corrections to most stock markets in the region, including
Indonesia's.

"I'm firmly optimistic that the prospects of our stock market
will be brighter in 1998, especially if it is supported by market
players and the public," Mar'ie said.

He said most Indonesian stocks, including the blue chips, were
already undervalued.

"I have repeatedly said they are undervalued and therefore,
this is the time to buy."

He said the average price earning ratio (PER) of local stock
currently stood at nine times, far lower than the normal level of
15 times.

"Whatever measures you use, a PER ratio of nine times is just
too low. It is not sustainable. I think the sustainable level
should be 15 times.

"Based on those assessments, I see the possibility of stock
prices increasing as much greater than the possibility of them
dropping further," he said.

The Jakarta Stock Exchange (JSX) composite index, the main
price gauge for the Indonesia stock market, dropped 37.86 percent
from 638.10 points at the beginning of the year to 396.53 points
recorded Wednesday.

Stock trading on the JSX was closed Thursday and yesterday for
Christmas.

According to the Indonesian Capital Market Supervisory Agency,
the fall in Indonesia's stock market index was less severe than
the falls in the Philippines, Thailand and Malaysia, where the
stock market indices dropped 41.44 percent, 54.65 percent and
55.28 percent respectively.

Singapore is the least affected market, with its benchmark
index falling 29.28 percent during the same period.

Mar'ie also predicted yesterday that the Indonesian rupiah
would continue to strengthen next year because it had depreciated
far below its real value.

"I'm also optimistic that our rupiah will continue to
strengthen into next year," he said.

The rupiah has dropped more than 50 percent of its value
against the U.S. dollar since the beginning of this year.

"This afternoon (yesterday afternoon), I checked the rupiah at
the 4,900 level (against the U.S. dollar). Transactions did
happen at that level. Who said it neared 7,000? And in the coming
days, the rupiah will continue to strengthen," he said.

Currency dealers said spot rupiah closed at 5,150/5,250 to the
greenback in Jakarta, compared to an opening of 5,800/5,900. It
fell briefly to 6,000.

Dealers said the rupiah was supported by market intervention
from Bank Indonesia, which was seen selling dollars starting at
5,650 down to 5,300.

They said the intervention was effective in propping up the
rupiah as the market was very thin. Most operators kept their
square position toward the year's end. Only desperate operators
with an open position would enter the market. (rid)

Intervention -- Page 11