Stock prices are likely to remain under pressure
Stock prices are likely to remain under pressure
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
are likely to remain under pressure this week despite some buying
from local institutional investors.
Stock analysts said President Soeharto's commitment to fully
implement the economic reform agreed upon by the International
Monetary Fund (IMF) brought a clearer picture about the country's
economy.
In a telephone conversion Friday with U.S. President Bill
Clinton, Soeharto said he remained committed to reforms agreed
with the IMF. The American president said that he was concerned
about the Indonesian crisis and promised to send his assistant to
help asses the economy. An IMF official will also visit Indonesia
this week to do the same thing.
"The President's pledge is good news for major investors and
some of them would certainly benefit from the situation," an
analyst said.
Most analysts, however, agreed that the market sentiment would
generally remain weak despite some big purchases from major
investors.
"The IMF team's visit and Clinton's support will give a
positive sign to help improve market confidence in the country's
economy," one analyst said.
"But if the outcome of the talks with the IMF official are not
positive, the rupiah might go down further and the stock market
continue to fall," the analyst said.
Phua Kok Kim, Equity Manager of HSBC Securities said that the
Indonesian government has so far shown no serious attempt to
implement the reform.
"There seems to be no clear concrete financial measures taken
by the Indonesian government yet to heal the economy," he told
The Jakarta Post.
The rupiah improved slightly Friday to close the week at
7,800/8,300 in Jakarta after breaking the 10,000 barrier on
Thursday.
A sales director of a joint-venture securities firm, however,
said that the strengthening of the rupiah had not yet sent a
positive sentiment on the stock trading.
Economists and analysts said that the persistent fall of the
rupiah would further worsen their financial performances because
most of the listed companies were exposed to foreign borrowings.
The gloomy prospect of their operations further dragged down
their prices.
Head of research of Mashill Jaya Securities, Tjandra Kartika,
said last week that about 50 stock prices of 147 companies on JSX
had been traded under their book value.
Head of Pentasena Securities, Mohammad Syahrial, said only 22
of 282 firms listed on the JSX were operating with sufficient
cash flow while the other 260 firms had serious cash flow
problems and were technically bankrupt.
"When we compare the current assets of all listed companies
with their total liabilities, we find only 22 companies which
will survive the current crisis," Syahrial told the Post.
Bankrupt
"The 22 firms have sufficient liquidity currently to finance
their operations, while the remainder have technically already
gone bankrupt," he said.
He said the 22 surviving listed companies were involved in
telecommunications, mining and food sectors.
A director of the JSX management said previously that about 40
percent of stock prices on the exchange had been traded under
their par value and about 60 percent had been traded under their
book value prices.
Head of Sales for BZW Niaga Securities, Adnan Tan, said that
most foreign investors, which once accounted for 65 percent of
transactions on the stock market, had not yet entered the market
despite the low prices.
"Foreign investors will not enter the Indonesian market until
the rupiah shows stability," Tan said.
Stock prices nosedived 16.36 percent last week as the rupiah
plunged through a series of record lows.
Head of research for Sigma Batara Fadjar, Limin Sutandi, told
the Post that the gloomy prospect of the stock trading was not
merely due to an unfavorable economic factor but also uncertainty
to the country's political atmosphere.
Calls by several politicians and political analysts to replace
Soeharto showed the negative outlook of the political climate,
other analysts said.
Indonesia will convene a general assembly meeting in March to
elect a president and vice president.
"Due to that, I predict the main price index might go down
further, to as low as 200 in the coming months," he said.
The JSX Composite index closed 67.04 points lower last week to
342.970 points from 410.01 in the previous week.
The average turnover was 463.85 million shares changing hand
on the regular market last week against 488.08 million shares in
the previous week.
The average value was Rp 509.42 billion last week compared to
Rp 417.14 billion in the previous week.
Most blue chip stocks closed mixed last with PT Telkom rising
by Rp 275 to Rp 2,500, Astra International by Rp 200 to Rp 1,075,
and Gudang Garam by Rp 250 to Rp 6,800.
Other stocks closed lower, with Indosat losing by Rp 2,375 to
close at Rp 8,125, cigarettemaker HM Sampoerna by Rp 250 to Rp
3,850, BII by Rp 25 to Rp 300, BNI by Rp 25 to Rp 450 and BDNI by
Rp 25 to Rp 275. (aly)