Stocks fall 5.81% on profit taking
Stocks fall 5.81% on profit taking
JAKARTA (JP): The main Jakarta Stock Exchange (JSX) index fell
5.81 percent yesterday due to a combination of mounting fears
over sporadic riots and profit taking on several blue chip
stocks.
The JSX Composite Index plunged sharply lower by 30.09 points
to 487.61 from the previous day's close of 517.70 with a total
turnover of around 1.18 billion shares changing hand on the
regular market valued at Rp 1.03 trillion (US$143.05 million).
One broker with a local securities house said the market was
dragged down by losses in most big shares, particularly dollar-
sensitive counters like PT Telkom, PT Indosat and PT Tambang
Timah.
Others said that several protests staged over escalating
prices of basic commodities had prompted most investors to take
profits yesterday.
"Fears that the riot will spread to other cities really comes
as bad news for the market. There was still some local buying in
the morning session before the protest commenced but after the
lunch break people started to take profits," a broker said.
"Most investors took profits on the banking stocks on early
gains they made the previous day," another said.
However, the head of research of Vickers Balls Tamara, Noraya
Soewarno said the stocks of several listed state-owned companies
and privately run companies with dollar earnings still offered
promising prospects for long-term investors.
"Most foreign investors prefer to invest in such stocks
because they are not influenced so severely by impact of the
monetary crisis," she said.
Attractive firms
Noraya said these companies included Indosat, PT Semen Gresik,
Tambang Timah, PT Aneka Tambang, PT Gudang Garam, PT INCO, PT
Daya Guna Samudera and Indah Kiat Pulp and Paper.
"They have strong fundamentals which in turn attract foreign
investors to buy their stocks."
She said the prices of these stocks had increased by between
20 percent and 254 percent since the monetary crisis hit
Indonesia in July last year.
The rupiah has lost around 74 percent of its value against the
American dollar since then while the JSX Composite Index has
fallen more than 30 percent since early July to 487.61 over the
same period.
"Even so, the stock prices of these companies have increased
dramatically over the same period. This means that foreign
investors are still interested in the future prospects of these
companies," she said.
The stock price of Indosat rose by 57 percent to close at Rp
12.500 on Feb 10 from Rp 7,475 on July 1, 1997, Semen Gresik by
27 percent to Rp 6,525 from Rp 5,525, Tambang Timah by 218
percent to Rp 10,400 from Rp 3,825, Aneka Tambang by 29 percent
to Rp 1,800 from Rp 1,400, Gudang Garam by Rp 38 percent to Rp
13,850 from Rp 10,050, International Nickel Company (INCO) by 254
percent to 10,800 from Rp 3,050, Daya Guna Samudera by 54 percent
to Rp 7,400 from Rp 4,800 and Indah kiat pulp and Paper by 20
percent to Rp 1,650 from Rp 1,375 over the same period.
"At the same time prices of stocks in other sectors had
descended even below their par value,' she said adding that other
listed companies had gone technically bankrupt because their
total liabilities were higher than their current assets.
Noraya said that most investors were still waiting to see how
the government would implement the reform package agreed upon
with the International Monetary Fund in exchange for a US$43
billion-sponsored package for Indonesia.
"If the government sticks to its reform commitment, the
portfolio investment here will be quite promising," Noraya said.
She added however that sporadic riots occurring in several small
towns due to escalating prices of basic essentials over the past
few weeks would cast a shadow over trading activities. (aly)