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)