Stock prices up 1.2% on renewed optimism

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)