Stock prices on JSX expected to rise

Stock prices on JSX expected to rise

JAKARTA (JP): Several stock analysts predict that stock prices
on the Jakarta Stock Exchange (JSX) may increase slightly this
week as foreign investors may continue their bargain hunting on
selected blue chips.

The analysts, however, said that investors would be very
cautious in making big transactions because of the concern about
a possible rise in domestic interest rates.

"The central bank's move to raise commercial banks' minimum
reserve requirement has intensified upward pressure on interest
rates. The situation is obviously unfavorable for stock market
performance," a senior analyst of a local securities company told
The Jakarta Post over the weekend.

He argued that the raising of reserve requirement from 3
percent to 5 percent, to be effective next April, is a positive
move in creating a strong banking system.

"It's also positive for businesspeople because it may reflect
that our economy is now very strong," he said.

He said, however, that the move, which will further tighten
the central bank's control over the banking system, is a positive
maneuver for the economy in a long-term point of view.

"But in the short term, the policy will hurt our banking
system. So, no wonder that most banking stocks reacted negatively
in midweek," he said.

He said a recovery on several banking stocks over the weekend
would not necessarily mean that investors had regained their
confidence on those stocks but it was merely a technical rebound.

Governor of Bank Indonesia Soedrajad Djiwandono suggested last
Friday that the increase of the reserve requirement should not
make commercial banks raise interest rates.

Commenting on general market sentiment, the analyst, who
declined to be named, said that foreign investors have become
more positive on Indonesia but they still need more time to
evaluate their position before deciding whether or not to bring
in more fresh funds.

"They might prefer to wait for new issues like PT Daya Guna
and particularly the state-owned Bank Negara Indonesia 46," he
said.

A senior trader at the JSX, Nurkhamid Akhmad, said that buying
interest from foreign fund managers is expected to continue this
week.

"What was happening in the last two days was a strong signal
for foreign investors' return to the market. And as usual, this
move will be followed by local investors," Nurkhamid told the
Post.

Nurkhamid, who is also a commissioner of the Surabaya Stock
Exchange, predicted that local investors will further chase the
shares of several companies which are currently preparing
corporate action like the affiliates of the Gajah Tunggal Group
and Kalbe Group.

Transactions

The return of foreign investors late last week boosted a 1
percent increase on JSX stock prices during the week.

The JSX Composite Index closed the week 5.2 points higher at
549.03.

Trading volume reached 619 million shares worth Rp 1.3
trillion (US$557 million) last week.

Foreign buy transactions amounted to Rp 755 billion as
compared to sell transactions of Rp 771 billion.

Nurkhamid confirmed that most transactions done by local
investors last week were driven by rumors or news on corporate
actions. Those stocks buoyed by such rumors included Bhuwanatala,
Mas Murni Indonesia, Intraco Pentha, Gajah Tunggal, BDNI and
Steady Safe.

Bhuwanatala, the operator of the Bandung Indah Plaza shopping
center, booked total transactions of Rp 26 billion during the
week on a "buy back" rumor.

An internal restructuring in the Gajah Group boosted
transactions of BDNI and Gajah Tunggal. The two companies booked
total transactions of Rp 39 billion and Rp 32 billion
respectively.

The "sleeping stock" of Intraco Penta recorded total
transactions of Rp 35 billion with 22 million shares changing
hands on the rumor that the company might have planned to issue
rights shares.

Telkom was recorded as the most active stock with a turnover
of 31 million shares worth Rp 103 billion.

Telkom's share price was unchanged at Rp 3,300 at last week's
close, while Indosat rose by Rp 375 during the week to Rp 7,675.

Cigarette maker HM Sampoerna shares decreased by Rp 300 to Rp
22,200, while Gudang Garam rose by Rp 525 to Rp 9,200.

The top 10 stocks in terms of value, other than Telkom, Medco,
BDNI and Intraco Penta, were Medco Energy Corporation (with a
trading value of 79 billion), Astra International (Rp 65
billion), HM Sampoerna (Rp 51 billion), Steady Safe (Rp 46
billion), BII (Rp 41 billion), Lippo Life (Rp 38 billion) and
Semen Gresik (Rp 37 billion). (alo)