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)