Mon, 24 Feb 2003

'Stock market will remain under pressure due to Iraq'

The Jakarta Post, Jakarta

Despite a slight rise last week, the Jakarta Composite Index will remain under pressure this week on continued concerns about the prospect of a war in Iraq, stock analysts said.

Last week's trading saw the stock index climb by around 0.8 percent to close at 402.24 points, up 2.728 as compared to the week before. But, a stock analyst at a European bank said that the rise would be short-lived as fears of war have yet to subside.

"As long as concerns about war remain, I think the (Jakarta) market will remain under pressure. The index will likely go below the level of 400 points again this week because of this sentiment," an analyst, who asked to remain anonymous, told The Jakarta Post on Sunday.

The absence of positive domestic sentiment would also add to investors' lack of appetite to take "the buy-position stance" , which would otherwise trigger significant major buying, in turn boosting the index, he added.

"So, in the meantime, investors would wait on the sidelines waiting for fresh leads, most notably the latest progress from Iraq."

The Iraq crisis has been the major issue for the last several weeks, sparking market jitters all over the world including Indonesia because if the war materializes, the world's already fragile economy would be hard hit.

The negative sentiment arising from the Iraq crisis has put a solid lid on the movement of the index in the Jakarta stock market, which was previously on an upward trend.

Last week, the daily volume averaged 202.68 million shares worth Rp 201.5 billion (US$22.6 million), compared with 174.5 million shares valued at Rp 205.8 billion the previous week.

Despite the gloomy outlook, however, selected shares from the blue chip companies would still draw attention from investors due to their relatively low prices and keep the index downward trend in check.

"This would help prevent the index from dropping too drastically," he added.

Meanwhile on the currency market, Dow Jones quoted local traders as saying that the U.S. dollar is unlikely to climb much higher this week, as the central bank stands poised to sell dollars to protect the rupiah at the Rp 9,000 per dollar level.

The rupiah closed last week at 8,910, up slightly from the previous week's closing of 8,930.