Stock prices continue to fall, but rupiah stable
JAKARTA (JP): The easing of concerns over President Soeharto's health failed to boost trading activity on the Jakarta Stock Exchange (JSX) yesterday.
Share prices continued falling in line with the decline in the regional markets.
"I would say that the impact of the rumor on Soeharto's health has faded. But the market is going to see soft trading until the results of Soeharto's medical check-up are known," a dealer from PT Peregrine Sewu Indonesia told The Jakarta Post.
"I don't think that investors' confidence is completely recovered, but it should be enough to support the market," the dealer said.
Meanwhile, the rupiah managed to stabilize yesterday against the U.S. dollar, but foreign exchange dealers said that investors remained cautious over fears of Soeharto's health.
On the spot market, the rupiah inched up to close the day at 2,337 from a range of 2,239 and 2,341 in morning trading.
The stock dealer said that yesterday's JSX decline was in tune with a weakening performance in the regional markets, such as in Hong Kong, which closed 3 percent lower following the announcement of a stronger employment figure in the United States over the weekend.
The figure made the equity market less interesting on the possibility of an increase in U.S. interest rates.
The JSX composite index declined by 1.2 points to close at 575.83 yesterday.
"But it's worth noting that a 0.2 percent decline on the JSX is relatively lower than the decline in other markets," he added.
"It could happen, because the JSX was already in an `oversold' situation when other markets began to decline," he said.
JSX share prices were down 3.2 percent last week, as investors overreacted to the rumor about Soeharto's health.
Commenting on yesterday's trading activities, the dealer from Peregrine said that the market was actually still under pressure in the morning session, in which the composite index closed the session seven points lower.
"But in late afternoon, foreign investors were back to take position on Telkom and Indosat. Following the foreign investors' move, local investors also tried to chase not only second liner stocks, but also big shares," he said.
"And those transactions, which happened in less than one hour before the market close, were able to cut the loss to only 1.2 points at the close in the afternoon," he said.
Declining stocks outnumbered advancing stocks 47 to 44, while 36 were unchanged.
Indosat
Indosat went up by two points to close at Rp 7,400, while Telkom rose one point to Rp 3,450.
Cigarette maker Gudang Garam dropped by eight points to close at Rp 9,200, while its rival HM Sampoerna decreased one point to Rp 24,575.
The JSX booked total transactions of 70 million shares worth Rp 179 billion yesterday.
The shares of a distributor of computer equipment, Inter Delta, managed to go up yesterday, although the company's management has declined rumors about corporate action, which boosted the trading of its shares last week.
Inter Delta's share prices, which closed last week 84 percent higher, rose again by Rp 425 to Rp 2,225 at yesterday's close, with 3.3 million shares changing hands.
"In our view, there was no relevant information which can influence Inter Delta's price movement. Therefore, the price increase was out of our control," the company said in a statement to the JSX.
"For the time being, we have yet to propose any corporate action whether to divest or to acquire shares in other companies. We have never been informed by any parties who want to make a tender offer," the statement said.
No JSX directors were available to comment on the issue.
"I think the rumor is going to prove true," a dealer with a foreign brokerage firm said.
Foreign exchange dealers said that the currency trading declined, with many investors sidelining the money market while awaiting details on Soeharto's health.
The dealers said the central bank had yet to intervene in the market, as the dollar's rise was still far below the upper-level of its intervention rate.
A dealer at a foreign exchange bank said that sales of Bank Indonesia's short-term promissory notes (SBIs), worth Rp 703 billion during the day, significantly reduced the rupiah supply.
"The shorter supply slightly supported the rupiah value. It meant that even though there was no direct intervention, the central bank was still able to push the rupiah value down through the sales of its SBIs," he said.
The central bank's intervention band against the American currency was set at 2,323 and 2,441, while yesterday's conversion rate was recorded at 2,323 (buy) and 2,369 (sale). (alo/hen)