Stock price drops caused by non-fundamental factors: Ruru
Stock price drops caused by non-fundamental factors: Ruru
JAKARTA (JP): The continued drops in share prices on the
capital market over the last three weeks were caused by non-
fundamental factors rather than by declines in the performance of
the country's economy.
Bacelius Ruru, chairman of the Capital Market Supervisory
Agency (Bapepam), said here yesterday the price falls were caused
by the psychological impact of the yen's appreciation against the
U.S. dollar and increases in interest rates in the United States.
"The falls in share prices are in compliance with the downturn
trend in the world's major stock exchanges," he told The Jakarta
Post.
The JSX (Jakarta Stock Exchange) Composite Index, which hit
612.88 points in January this year, the highest level since 1992,
continued declining in the last three weeks to close around 25
percent lower at 460 points on Friday of last week. The index
rose for the first time in almost three weeks yesterday to close
at 458.73 from 457.29 on Thursday.
Ruru estimated that the downward trends will not hold sway for
a long time, given the bright outlook of the country's micro-
economic and macro-economic conditions.
"The outlook of the country's economy remains promising. We
have nothing to worry about," he said.
A number of approaches, including plans to establish stronger
legal procedures and to improve the stock trading system, have
been set fourth to develop the capital market in the country,
Ruru said.
He said the government, for example, will submit a new capital
law to the House of Representatives (DPR) in October this year
for approval, replacing the present jurisdiction.
Other approaches include the recent establishment of
supporting agencies for the market, such as the share clearing
and depository agency (PT KDEI), the credit rating agency
(Pefindo) and the Public Information Service Office (PISO).
The trading system on the Jakarta Stock Exchange (JSX) will
also be fully computerized next January to expedite share
transactions.
"These approaches will bring a fresh impetus in stock
trading," he said. (hen)