Stock mart consolidates as holidays approach
JAKARTA (JP): Share prices on the Jakarta Stock Exchange are likely to consolidate as the Chinese New Year and the Moslem Idul Fitri holidays approach.
Securities analysts said holiday fever and the slim probability of the U.S. Federal Reserve raising the interest rate in Tuesday's meeting would be the main reasons for the expected decline in buying sentiment this week.
Most security analysts told The Jakarta Post the market was hit by selling pressure earlier last week but it showed signs of strength before closing the week.
A. Soerya of HG Asia brokerage firm said the improving sentiment at the end of the week had not been anticipated as most investors had estimated the market would continue its downward turn.
"We expected the market would be slowing down but we were wrong," he said.
The JSX index rose 1.8 percent or 12.12 points to close at 691.12 against last week's 678.91. The index rose steadily from early last week to reach 691.33 Wednesday on the back of the improvement in investor confidence in the local market.
The index weakened Thursday with the news that angered mobs in Karawang, West Java had damaged churches, homes and businesses of ethnic Chinese. The share prices, however, gained ground before closing the week, with the index reaching a new record high of 691.12 Friday.
Daily turnover averaged 272.6 million shares worth US$238.1 million in comparison to the previous week's 337.8 million shares worth $270.9 million.
The trading volume reached 263,8 million shares in against last week's 301 million.
Transaction values totaled Rp 550 billion compared to last week's Rp 632 billion.
Edwin Syhruzad of Amsteel Securities said there was still room for the JSX index to further increase in the coming weeks, given the average price earning (PE) ratio was still lower than those in other markets in the region.
"The price earning here is among the third lowest in the region," he said, adding this would provide more opportunity for share prices to further increase.
Reports that foreign investment funds were raising their investment portfolios in Indonesia would also become an important incentive in trading activities in the coming weeks.
Jasmine Tedja of HSBC said foreign fund managers were more confident about the Indonesian market even though there were some fears the country's political climate would hot up before the May general election.
"The fund managers had anticipated that earlier this year," she said, adding that the rising JSX index would further attract foreign fund managers.
Most analysts and dealers attributed increased trading activities to reports about the listed companies' expansion programs.
PT Tambang Timah gained by Rp 950 to close at Rp 5,050, Bunas Finance Indonesia gained by Rp 350 to close at Rp 2,200, Branta Mulia gained Rp 500 to close at Rp 2,700.
Edwin of Amsteel Securities said Tambang Timah was a favorite due to reports the tin mining company would join with the country's timber tycoon Mohamad 'Bob' Hasan to enter the disputed Busang gold mine, in East Kalimantan.
While Lippo group stocks such Multipolar gained Rp 75 after the shareholders rubber stamped its plan to acquire a majority stake in the publicly listed department store chain Matahari.
The same held true for Bakrie & Brothers' shares following the announcement its management had received an offer from the politically-well connected Nusamba business group to buy its shares in Indocopper, which owns 9.36 percent of Freeport Indonesia.
Bakrie & Brothers gained Rp 150 to close at Rp 1,175 from the previous week's Rp 1,025.
The investors had high confidence in Bakrie's shares because they believed the divestment of Indocopper meant Bakrie & Brothers would be more serious about developing its core businesses such as telecommunications, infrastructure and plantations, said Jasmine of HSBC.
HM Sampoerna gained Rp 500, while its competitor Gudang Garam dropped by Rp 150 and the country's largest automaker Astra International dropped by Rp 75 to close at Rp 6,250.
This week, with the Chinese New Year and Idul Fitri holidays approaching, the market is expected to slow down or if not it will be stagnant.
An analyst said the banking stock would remain the favorite stock to pick this week due to a better projected performance of the country's banking industry.
Also worth noticing is consumer products stock which is predicted to perform well due to increasing consumption during the holidays.
But on overall market performance, analysts said that most foreign fund managers have turned their eyes in the direction of Indonesia. With that, the JSX would gain ground this week.
An analyst from a joint venture security firm said high contribution from local investors would also boost the market.
"Local investor participation shows they are expecting to see the index record 700 this year," he said. (09)