Stock prices up 1.2% on renewed optimism
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX) rose 1.2 percent yesterday in response to the election of Soeharto and B.J. Habibie as president and vice president for the next five years, stockbrokers said.
They said stock trading was not significantly influenced by demonstrations staged by students on several campuses across the country yesterday demanding economic and political reforms.
"Though trading volume remained low, some local brokerage houses were making some big transactions, especially on selected stocks," a broker with Trimegah Securities said.
He said transactions were largely dominated by domestic investors who believed that the country's political situation had started to stabilize.
Christina Lim of Harita Securities said local investors were upbeat that the International Monetary Fund (IMF) and the government would eventually reach a compromise over their ongoing conflict on how to stabilize the beleaguered rupiah and mend the wrecked economy.
"I think the government and the IMF will likely reach a compromise soon," she said pointing out that the plan to peg the rupiah to a hard currency, most probably the U.S. dollar, would stabilize the rupiah.
Several brokers, however, said most foreign investors were still staying away from the local market as they could not discern any clear government direction to improve the country's ailing economy.
"The market has not seen any clear indication on how the government plans to restore public confidence and bring the economy back to high growth," a broker with a joint-venture securities house said.
He added that most foreign brokerage houses like ING Barings, Merrill Lynch, Indosuez WICarr, Credit Lyonnais and Jardine Fleming Nusantara made more selling transactions than buying orders.
The JSX Composite Index rose 6.31 points to 498.18 points yesterday from 491.87 the previous day.
Trading volume totaled 480.86 million shares on the regular market worth Rp 595.51 billion (US$56.71 million).
Brokers said telecommunications stock Telkom gained ground yesterday, rising Rp 50 to Rp 4,025 with 9.3 million shares traded on the regular market. Cigarette producer HM Sampoerna also rose Rp 175 to Rp 5,725 at a volume of 3 million shares.
As stock prices climbed, the rupiah in the currency market closed lower at 10,500 against the U.S. dollar in moderate trading, currency dealers said.
Yesterday's close was 2 percent lower than the previous day's close of 10,200.
At the current value, the rupiah has lost more than 75 percent of its value against the greenback since its pre-crisis rate last July.
Dealers said most operators did not make any big transactions as they were waiting for government announcements on the new cabinet and whether the rupiah would be pegged to the U.S. dollar under a currency board system.
"Trading volume remained thin as most operators did not want to take any new positions," a local bank chief dealer said. (aly)