Stock market shrugs off IMF-led aid package announcement

JAKARTA (JP): Trading activities on the Jakarta Stock Exchange (JSX) shrugged off the government's announcement on the IMF-led aid package plan yesterday, with most shares losing ground in active trading.

The JSX Composite Index, which booked a rare gain on Thursday, dropped by 2.45 points to close at 500.41 on profit taking.

Total turnover was 801.938 million shares valued at 1 trillion rupiah (US$282.53 million).

A stock broker at a joint-venture securities firm said trading activities were seen as more active but most investors sold their stocks to make a profit.

"A lot of people have been seen in the market making profit off of previous gains," Christina Lim, president of Harita Securities, said. "The overall mood remains very cautious," she said.

Tjandra Kartika of Mashill Jaya Securities said yesterday that investors seemed to ignore the government's reform package announcement.

"Besides, there's nothing surprising in the outcome of the package. The market has long known about the rescue plan," he said.

Minister of Finance Mar'ie Muhammad announced an agreement with the International Monetary Fund (IMF) yesterday on a broad program of reform and financial assistance that could be worth some $30 billion.

A statement read by Mar'ie said the government believed the three-year program "will be effective in restoring the health of the Indonesian economy..."

A director of Asian Development Securities, Naotake Ikeda, said yesterday that it was very difficult for investors to predict the market's direction.

But other securities analysts said investors needed time to digest and evaluate the details of the IMF-led rescue package for the Indonesian government.

"There is only one thing the market hasn't known, that is the amount of the financial aid. While everything else ... the market has known," Tjandra said.

Christina said the announcement did not significantly surprise stock markets, marked by a fall in share prices yesterday.

"Stock prices even fell on profit-taking on gains they made in the previous days," she said.

As stocks fell, the rupiah also followed suit easing slightly lower against the U.S. dollar to close at 3,630/50 compared to the opening of 3,600/20 in the morning session, currency dealers said.

The dealers said the rupiah softened against the dollar after earlier rising when the government announced the rescue package.

They said the Indonesian currency rose to as high as 3,570 from an early low of 3,685 in midday trading, before closing at 3,630/50 on the lack of a positive response to the financial rescue package announcement by the International Monetary Fund (IMF) for Indonesia.

A dealer with a local bank said yesterday's announcement of the IMF-led financial package did not surprise the market, because the market had long anticipated the financial package, including the conditions attached to it.

"What the market really wants to know now is the monetary figure of the rescue package. That's all," he said.

"The financial package, including conditions attached to it, is no longer a big concern to investors," the dealer said. (aly)