Stock prices predicted to remain under pressure

Stock prices predicted to remain under pressure

JAKARTA (JP): Share prices in the local stock market are
expected to remain under pressure again this week with most
investors keeping watch on the development of the country's
political and economic situation, financial analysts said.

They said lack of positive leads from the domestic market,
coupled with ever-present fears of a deepening global financial
crisis would further weigh down market sentiment in the local
stock market.

Anton Karlam, head of research at Panin Sekuritas, said
possible high inflation for January and signs of increasing
interest rates would heavily pressure the local bourse.

"Moreover, uncertainty over our banking recapitalization
program would languish the already gloomy outlook of our market,"
he said.

He noted that public outcry over the government's plan to
provide Rp 3.75 trillion (US$415 million) to help recapitalize
Lippo Bank, controlled by Mochtar Ryadi, would cast a shadow on
the market.

Moreover, the House of Representatives has balked at the
government's proposal to set aside Rp 16 trillion in the
1999/2000 budget to pay the interests of bonds used to
recapitalize troubled banks.

Securities analysts said that the ups and downs of other
equity markets in the region would continue to dictate the
movement of the local market.

"I think the market will be directionless this week, with a
tendency to weaken a bit, led by the movement in the regional
market," one analyst with a joint venture securities house said.

Panin's Anton said that investors, especially foreigners,
would not be tempted to reenter the local battered market as they
could not find any meaningful guide to invest here.

"Foreign investors have not been satisfied with developments
on Indonesia's economic and political fronts," Anton contended.

Stockbrokers said persistent market fear that antigovernment
protest to take place in the capital and other major cities would
further affect the market.

"Though sentiment remains bleak, we expect domestic investors
to enter the market again," Vonny Juwono, institutional sales
broker with Trimegah Securindolestari, said.

The Jakarta Stock Exchange (JSX) main composite index rose 2.3
percent, or 9.51 points, to 411.93 last week compared to 402.40
the previous week.

Daily average volume fell to 250 million shares changing hands
last week compared to 279.5 million shares the previous week,
while daily average transaction fell to Rp 267.88 billion from Rp
416.87 billion.

Like the stock prices, currency dealers and financial analysts
said that sentiment on the rupiah would remain bearish in the
coming weeks despite repeated assurances by the monetary
authority that it would defend the rupiah whenever there was
strong speculative attack by offshore operators.

A chief dealer with a joint venture bank said the rupiah would
not recover significantly until the general election in June.

Although the rupiah managed to rise below the 9,000 level last
weekend, it did not indicate any improvement in the sentiment on
the rupiah, he said.

The rupiah closed at 9,050 on Friday last week after hitting
an intraday high at 8,800.

He warned, however, that renewed attacks on the rupiah could
happen anytime, especially when social tensions run high.

"Some offshore operators are still watching closely as to when
to attack the rupiah," the dealer said.

Nevertheless, he predicted that the rupiah would trade between
9,000 and 9,400 this week. (aly)