Stock trading to recover in second half

Stock trading to recover in second half

JAKARTA (JP): The dormant trading on the Jakarta Stock
Exchange (JSX) is expected to recover in the second half of this
year on the impact of the projected increase in corporate
earnings and in the improvement of trading transparency, say
securities analysts.

Analysts of both domestic and foreign securities companies
estimate that the JSX Composite Index will break the
psychological barrier of 500 before the close of the year, or 20
percent above the current level of 415.

The push factors, according to the analysts, will include the
betterment in the global monetary climate, the improvement in
earnings of listed companies and the advancement in the trading
transparency.

Nurkhamid, the chairman of the Jakarta Brokers Club, estimated
that the yen appreciation, the major cause of the sluggish stock
trading on the world's stock markets, will gradually ease and
stabilize at a favorable level within the next two months.

"No governments like the yen appreciation to continue and
that's why I am optimistic that, sooner or later, they will come
up with an effective measure to curb the yen surge," he said,
adding that the more stable yen is expected to further revitalize
trading activities.

Nurkhamid, who is also the director of PT Arga Arta Securitas,
said that foreign investors, the dominant factor in the trading
activities on the JSX, have become more active in the recent
weeks.

"Trading activities are, in fact, getting more active as many
foreign investors benefit the low price levels. I expect the
upward trend to continue," he said.

Bottom

Most share prices have reached their bottom levels as the
result of continued drops in the last three months, pushing down
the JSX Composite Index to fall to this year's lowest level of
415, down from 470 at the opening of the trading in January.

Bill Foo, the president of Schroders Indonesia, also expressed
confidence over the bright outlook of the local stock exchange in
the second semester of this year.

The improvement in stock trading activities will be in
conformity with the country's estimated more stable monetary
system, he said, adding that the advancement in the corporate
earnings would also play a major impulse in the trading
activities.

Nurkhamid said the planned introduction of an automated
trading system and a new capital market law in the second half of
the year would also become important push factors.

"The new trading system and new legal instrument will ensure a
better trading transparency. This is expected to significantly
improve the public confidence," he said.

The JSX is expected to begin using an automated trading system
this year, enabling the exchange to handle 50,000 transactions
per day and to carry out 40,000 buy and sell orders per hour.

In addition, the government recently submitted the draft law
on the capital market to the House of Representatives (DPR) as
part of its commitment to provide a better legal foundation to
the country's capital market activities.

The draft law, which will replace the outdated 1952 Capital
Market Law, will soon be deliberated by the House for approval.
(hen)