Stock prices expected to be stable this week

Stock prices expected to be stable this week

JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
are predicted to be stable this week on lack of fresh news while
speculations on certain stocks, including Astra International and
the Lippo Group's financial affiliates, are likely to continue,
dealers said.

A dealer said that rumors of a possible takeover are expected
to further buoy transactions on Astra shares. However, he
predicted that Astra's share prices would not go up as strongly
as two weeks ago.

"Several large crossing transactions this week gave a clue
that new investors should have bought Astra shares. So, I do not
expect other large transactions next week," a dealer with a
foreign brokerage said.

The dealer, who declined to be named, speculated that once the
new investors are named, the market could immediately react
either positively or negatively.

He noted that for a blue chip company like Astra, big names
are no longer the main catalyst for pushing up share prices.

Several politically well-connected businessmen, including
timber tycoon Mohammad (Bob) Hasan as well as President
Soeharto's eldest daughter Siti Hardiyanti Rukmana and second son
Bambang Trihatmodjo, have been frequently cited as potential new
investors.

On the other hand, timber tycoon Prajogo Pangestu and
businessman Henry Pribadi are believed to be the most likely
sellers of Astra shares.

"I think the new investors must be a big consortium because
that is the only sensible reason behind active transactions on
Astra shares last week," he told The Jakarta Post over the
weekend.

He argued that Astra's current prices (at Rp 3,775, or
US$1.61) fairly reflect its fundamentals.

"Therefore, if it's true that the new investors have executed
the transactions at higher prices (above Rp 4,000 per share),
those investors must have a motivation to control Astra," he
said.

"Astra is a big company. It's also the only listed company
which has the most independent management. So it seems to me that
there should not be any possible engineering," he added.

He questioned, however, how the consortium could afford to
back up the transactions with a huge amount of fresh money.

He said Astra's share prices might further go up on the
condition that the new investors were still looking for more
shares, not because of the investors' popularity.

Meanwhile, a director of a joint-venture brokerage, who
preferred anonymity, told the Post that investors will also pay
attention to the Lippo Group's stocks.

"Market reactions will better reflect whether the Lippo
Group's restructuring plan, which has been approved by its
minority shareholder, is fair," he said.

He said the Lippo Group needed more time to prove that its
move was well-accepted by the market because most of market
players believed that the managements of Lippo Bank, Lippo Life
and Lippo Securities were not quite independent in proposing the
plans.

"Investors will also be more cautious on both Lippo Securities
and Lippo Life on the likelihood that Lippo Bank will gradually
reduce its stake in the two companies in efforts to eliminate
cross-holding ownerships," he added.

A Lippo Group spokesman, Roy E. Tirtadji, has confirmed that
Lippo Bank is willing to do so to comply with the existing
regulation, particularly the new law on limited liabilities
companies which, among other things, bars cross-holding
ownerships.

Commenting on the general market outlook, several dealers
contacted by the Post said they did not expect any big news,
positive or negative, which could strongly drive share prices
upward this week.

"I would say that as long as foreign investors remain active,
the daily volume will stay stable at around Rp 250 billion," said
Dandossi Matram, a director of PT Bakrie Securities.

Dandossi also predicted that foreign investors will continue
to be net buyers.

Astra's take-over

Share prices on the JSX increased by 0.8 percent last week,
with the composite index closing 4.309 points higher at 573.30
points, mostly due to active transactions on Astra.

Total transactions reached 846 million shares, valued at Rp
2.2 trillion.

The value of foreign buy transactions amounted to Rp 1.3
trillion, against sell transactions of Rp 1.2 trillion.

Data from the JSX showed that Astra booked total transactions
of 195 million shares worth Rp 841 billion during the week,
compared to 57 million shares at Rp 189 billion in the previous
week.

During the last two weeks, Astra's share price rose 45 percent
from a low of Rp 2,600 to Rp 3,775 at last week's close.

Among the most active stocks last week were two from the Lippo
Group, Lippo Securities and Lippo Life.

Lippo Securities recorded a trading volume of 32 million
shares worth Rp 46 billion, while Lippo Life saw 38 million
shares changing hands at Rp 78 billion.

Other most actively traded stocks in terms of value were
Telkom (with Rp 88 billion), Davomas (Rp 80 billion), Matahari
(Rp 59 billion), HM Sampoerna (Rp 56 billion), Berlian Laju
Tenker (Rp 39 billion), Kedawung Setia (Rp 38 billion) and
Igarjaya (Rp 36 billion). (alo)