Stock up almost 5% as rupiah strengthens
Stock up almost 5% as rupiah strengthens
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
rose nearly 5 percent yesterday, supported by strong foreign and
local buying of blue chip and mid-size stocks, brokers said.
They said foreign brokerage houses like Credit Lyonnais and
Indosuez-W.I. Carr and state-owned Bahana Securities were on net
buying positions for most blue chip stocks.
"Foreign investors are making a lot more buying orders than
selling orders on large capitalized stocks," Bahana Securities'
head of equities, Bruce Rolph, said.
Brokers said local and foreign investors shrugged off news
reports of riots and demonstrations in several towns across the
country yesterday.
"It's a bit strange that the capital and currency markets did
not react negatively to riots and demonstrations," a broker with
a joint-venture securities firm said.
But brokers said investors were confused and worried about the
government's plan on a currency board system, which would peg the
rupiah to a fixed exchange rate with a hard currency, most likely
the U.S. dollar.
"I think they are afraid the government will soon peg the
rupiah to a foreign exchange at fixed rate soon (and that they
would loose money)," Rolph said.
Despite increasing international disagreement over the
government's currency board plan, the rupiah strengthened
slightly yesterday to close at 8,900 against the U.S. dollar from
the previous day's close at 9,000. The rupiah even touched 8,500
yesterday.
"I think Singapore operators are afraid to hold their long
dollar positions for fear of the peg news," a chief dealer with a
local private bank said.
Stock analysts said the volatility of the rupiah always
influenced the stock market. They concluded the government's plan
to peg the rupiah to a hard currency could establish a good
environment for stock trading.
Another broker with a joint venture securities firm said stock
trading activities were unusually high yesterday, pointing to
massive speculative transactions.
"It's quite difficult to predict the direction of the market
now. I just don't understand it because some or even many people
are trading on speculative motives," the broker said.
The JSX Composite Index rose 23.57 points to close at 496.25
yesterday from 472.67 the previous day on a total turnover of
646.3 million shares on the regular market worth Rp 719.73
billion (US$80.29 million).
Most large-cap stocks made some gains yesterday, with state-
owned telephone company Telkom rising Rp 300 to Rp 3,775 and
satellite operator Indosat increasing Rp 50 to Rp 13,650.
Cigarette maker Sampoerna climbed Rp 200 to Rp 5,525 and its
competitor Gudang Garam rose Rp 1,250 to Rp 11,625.
Bank International Indonesia rose Rp 25 to Rp 600, Bank Negara
Indonesia also increased Rp 25 to Rp 575 and Bank Dagang Nasional
Indonesia remained unchanged at Rp 300. (aly)