Stock prices up 3.1% on foreign buying
Stock prices up 3.1% on foreign buying
JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX)
climbed 3.1 percent yesterday on the back of strong foreign
buying for certain selected stocks, analysts said.
Bahana Securities' Director of Equities, Bruce Rolph, said
short-term foreign institutional investors made large investments
in bell-weather stocks through joint venture brokerage firms.
"This is just another day of arbitrage trading by offshore
investors," Rolph said.
He said the rise in stock prices was also triggered by market
speculation that the government would go ahead with its plan to
peg the rupiah to a foreign currency, most likely the U.S.
dollar.
Rolph and other securities analysts said that pegging the
rupiah to the U.S. dollar would revive crippled and indebted
local businesses as they could then make plans based on a fixed
exchange rate.
But, they said, a fixed exchange rate would also pose another
problem for most companies as it would drive up interest rates.
If implemented, businesses could face funding difficulties.
A broker with a joint venture securities house said the rise
in the stock prices index could be misleading as it happened in
the last minutes of trading.
The JSX Composite Index closed 14.50 points higher to 472.20
yesterday.
Total turnover was 438.15 million shares worth Rp 680.47
billion (US$71.62 million).
Most large-cap stocks made gains yesterday with state-owned
domestic telecommunication firm PT Telkom rising by Rp 125 to Rp
3,650, satellite operator PT Indosat by Rp 1,350 to Rp 15,150 and
and Tambang Timah by Rp 75 to Rp 7,925. Shares in cigarette maker
PT HM Sampoerna rose by Rp 100 to Rp 5,200, while competitor
Gudang Garam recorded a Rp 500 gain, rising to Rp 9,600.
Bank International Indonesia shares climbed Rp 25 to Rp 550,
Bank Negara Indonesia rose Rp 25 to Rp 550, Bank Dagang Nasional
Indonesia remained unchanged at Rp 300.
Nevertheless, stock analysts said the outlook remained bleak
as the market remained concerned over rupiah volatility and
latest political and social developments.
The rupiah ended trading in a stronger position against the
U.S. dollar yesterday, closing at Rp 9,400/9,600 from an opening
rate of Rp 10,200. It was boosted by plans to peg the rupiah to
the U.S. dollar at a fixed rate of exchange.
"The rupiah remained strong for the whole trading day showing
no sign of retreat since its opening," the head of the treasury
department in a joint venture bank said.
He said the government's plan to proceed with the currency
board system caused more offshore operators to take profits and
unload their dollar holdings for rupiah in case the government
pegged the rupiah at around the 5,500 level.
"Singapore operators sold a lot of dollars for rupiah since
the morning. But overseas dollar selling met some resistance from
local state banks," he added. (aly)