Stock prices lose ground as rupiah weakens

Stock prices lose ground as rupiah weakens

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
fell by 2.6 percent yesterday on heavy selling in some blue chip
stocks as the rupiah weakened slightly, stockbrokers and currency
dealers said.

Stockbrokers said that the main price gauge closed 11.69
points lower to 437.94 yesterday with a total turnover of 420
million shares worth Rp 349.5 billion (US$102.79 million)
changing hands on the regular market.

They said that yesterday's trading was marked with the
suspension of trading in Bank Danamon shares at the JSX due to an
increase in share prices by almost 30 percent.

"Bank Danamon was suspended yesterday at 15:13 hours because
its price had increased by almost 30 percent," one broker with a
local securities firm said.

The broker said that many investors rushed to buy Bank Danamon
shares on wildly-speculated talk that the bank would be taken
over by some Indonesian conglomerates.

"The rush caused the bank's stock price to increase to Rp 650
per share yesterday until it was halted automatically by the JSX
management," a broker said.

The JSX management said that the bank's stock trading would be
resumed today.

Asian Development Securities business director Naotaka Ikeda
said that most investors, especially domestic ones, were easily
influenced by market rumors because there was not any positive
incentive in the market.

He said there were market rumors that Bank Danamon was in a
negotiation with privately-run Bank Central Asia (BCA) to
purchase a certain stake in Bank Danamon.

"It was this rumor that pushed the price of Bank Danamon to
increase sharply yesterday," Naotaka said.

Another broker said that the country's largest automaker,
Astra International, was also under selling pressure on market
speculation that timber tycoon Prajogo Pangestu would sell his
equity stake in Astra to other companies due to his financial
problems.

"The market speculated that Prajogo Pangestu, who owns 50
percent of the closed Bank Andromeda, was facing a liquidity
problem and would likely sell his stake in Astra," a broker said.

Bank Andromeda, along with 15 other insolvent banks, was
closed by the government on Nov. 1 as part of the reform package
which is supported by US$23 billion in standby loans from the
International Monetary Fund, the World Bank, the Asian
Development Bank and other sources.

"Most investors are out of the market. Trading was largely
driven by rumors," Naotaka said.

An analyst with Harita Securities said that the stock prices
in the JSX had been very cheap after they had fallen by almost 40
percent since early July.

"The JSX price has not bottomed out yet. But now is the best
time for investors to buy stocks because they have been very
cheap," she said.

As stock prices lost ground, the rupiah weakened slightly in
late trading yesterday despite earlier intervention by the
central bank, currency dealers said.

Dealers said they had been skeptical that the intervention
would be successful because of the sustained strong demand from
corporations for dollars.

"The rupiah failed to sustain early gains as corporate demand
for dollars remained strong," Reuters quoted one foreign bank
dealer as saying yesterday.

Spot rupiah was quoted at 3,400/3,430 against the American
dollar compared to an opening of 3,395/3,405 in the morning
session.

The intervention, the amount of which was described by dealers
as "moderate", had helped strengthen the rupiah and stop it from
breaching the psychological barrier of 3,400 in early trading.

They said the central bank was believed to have intervened in
the market after the rupiah had earlier fallen to 3,415 against
the dollar.

Bank Indonesia sold dollars all the way down from 3,400 to
3,355 in early trading. Dealers said they did not detect any
further intervention in late trading. (aly)

Market, currency -- Page 11