Stock prices likely to remain volatile
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) are likely to remain volatile this week due to persistent anxiety over a weakening rupiah against the U.S. dollar, securities analysts and brokers said.
The securities analysts said the persistent decline of the rupiah against the American dollar would continue to affect stocks trading on the JSX despite a rise in the last two days of last week.
The rupiah breached the psychological level of 4,000 Friday touching a new historic low of 4,020 against the U.S. dollar in afternoon trading before closing at 3,970/90.
Securities analysts said that they remained concerned over the rupiah's persistent decline, fueled by a continued demand for dollars by local companies to cover foreign debts which would mature by the end of the year.
"I think people still will closely watch the direction of the rupiah this week," Mohammad Sjahrial, the research head of Pentasena Securities said last week.
Harry Danardojo, sales director of Lippo Securities, said that stock brokers would focus their attention on the rupiah.
"The sooner the rupiah reaches its new equilibrium -- without government intervention -- the quicker the stock market will recover," he said.
Most securities analysts said last week that the announcement by Minister/State Secretary Moerdiono about President Soeharto's health would create negative sentiment in the stock market.
Moerdiono said that the President would take a ten-day rest.
"I would like to announce that the presidential medical expert team has advised the President to take a rest," Moerdiono said.
"When President Soeharto went to Germany for a medical checkup last year, the main price index on the JSX fell," one analyst said.
In July 1996, President Soeharto went to Germany for a medical examination at a cardiac hospital resulting in a clean bill of health.
However, some other stock analysts expressed optimism over news that Minister of Finance and Indonesian businessmen would join forces to regain foreign investor confidence in the country's economy.
A stock broker with a joint venture securities firm said that the market could get a boost from the news that a group of prominent businessmen and personnel from the Ministry of Finance would go to Washington and New York to persuade creditors to roll over their debt.
"I think news about the business visit of the Minister of Finance and other businessmen is good. They'll be able to persuade the creditors about the Indonesian companies' foreign debts," he said.
The JSX composite index closed 13.07 points higher last week to 414.778.
The average daily turnover was 547.40 million shares changing hands compared to 326 million in the previous week.
The average daily transaction value was Rp 265.94 billion (US$101.06 million) last week in comparison to Rp 291.57 billion in the previous week.
Most state big capitalized stocks gained ground last week with state-owned telecommunications firm PT Telkom rising Rp 225 to Rp 2,900 and satellite operator Indosat by Rp 300 to Rp 8,575.
Cigarette maker Sampoerna rose Rp 125 to Rp 4,975, while competitor Gudang Garam was up Rp 1,250 to Rp 9,000 and Bank Negara Indonesia gained Rp 25 to Rp 600.
Bank Internasional Indonesia and Bank Dagang Nasional Indonesia (BDNI), however, closed unchanged at Rp 475 and Rp 400 respectively last week. (aly)