Stocks drop due to decline in blue chips

JAKARTA (JP): Share prices on the Jakarta Stock Exchange (JSX) were again driven down yesterday by a sharp fall in large capitalized stocks, stockbrokers said.

The JSX Composite Index ended 0.3 percent lower, down 1.37 points to 490.48, on a total turnover of 317.10 million shares worth Rp 409.99 billion (US$51.57 million).

Brokers said most investors dumped blue-chip stocks like Astra International, Telkom and Indosat due to their poor corporate results.

Astra International announced Thursday a net loss of Rp 279 billion in 1997. Astra's price shed Rp 75 to Rp 1,750 on a total turnover of 30.12 million shares changing hands on the regular market.

Domestic telecommunications provider Telkom also dropped by Rp 25 to Rp 3,375 on 6.53 million shares, and international telecommunications firm Indosat fell by Rp 225 to Rp 12,575 on 41,000 shares.

"Though investors have anticipated such poor corporate results, they dumped the stock anyway," a broker with BZW Niaga Securities said.

Brokers also attributed the marginal fall in stock prices to a continuing shift in portfolio investment, from stocks to bank deposits, by most investors.

"Again, there is no reason to invest in stocks when banking interest rates offer much higher returns," Karman Pramurahardjo of Harita Securities said.

Brokers said the increase of time-deposits rates at most commercial banks to as high as 52 percent for one-month maturity had lured local and foreign investors.

Persistent demonstrations for political and economic reforms by university students across the country have put more pressure on the lackluster trading activities on the local bourse, brokers said.

Most brokers said foreign investors feared that student demonstrations might culminate in violent clashes with security authorities in the coming days or weeks.

As the stock prices declined, the rupiah remained steady yesterday, after falling to an intraday low of 8,050, to close at 7,925 against the American dollar, currency dealers said.

The close was slightly higher than the 7,950 of the previous day.

Dealers attributed the rupiah's strong stance yesterday to the central bank's intervention in the money market by offering its short-term promissory notes (SBI) at rates higher than ordinary auction rates.

They said the central bank offered 52 percent for its one-week SBI, compared to ordinary rates of 48 percent, two-week notes at 53 percent, against auction rates of 49 percent, and one-month notes at 52 percent against its auction rates of 50 percent.

"Such higher SBI rates have lured offshore fund managers to invest their short-term funds in the SBI," a chief dealer with a joint venture bank said.

Dealers said the rupiah traded at a range from 7,800 to 8,200 yesterday. They predicted it would continue to traded at that range next week. (aly)