Stocks gain ground, rupiah stable on reform package
Stocks gain ground, rupiah stable on reform package
JAKARTA (JP): Local stock prices gained ground yesterday and
the rupiah stabilized following a government announcement on
plans to lift foreign portfolio ownership limits and gradually
decrease interest rates, analysts and dealers said.
Stockbrokers said share prices on the Jakarta Stock Exchange
rose 7 percent yesterday -- the first rise since Aug. 27 -- with
the composite index jumping 33.57 points to close at 512.58.
The stock market lost 31 percent from its peak level on July 8
when the composite index reached 740.88 points.
Dealers said yesterday's largest intraday increase since July
8 was in response to the government's reform package
announcement.
"The market responded positively. We expect the government
will follow up on the decision quickly, so investors will fully
regain their confidence," said one stockbroker.
Yesterday's increase was driven by large cap stocks. Most blue
chip stocks like Telkom, Indosat, Gudang Garam, Bank Negara
Indonesia and HM Sampoerna booked gains yesterday.
Head of research at Sigma Batara Securities, Fadjar Limin
Sutandi, said he suspected the measures were aimed at addressing
the primary market.
"I'm afraid it will not help trading on the secondary market.
But, let's see how the market reacts tomorrow," he said.
Fadjar said investors were still waiting for positive action
by the government to prevent the rupiah and stock market from
tumbling further.
Most securities analysts agreed the government's planned
measures would help enliven investors' confidence in the
country's capital market, but that would not be enough.
Yesterday's announcement also helped prevent the rupiah from
further falling against the U.S. dollar, foreign exchange dealers
said.
Spot rupiah, which opened at 3,000/3,040 against the U.S.
greenback, dropped to a day low of 3,070 but soon recovered
following the announcement to close at 3,025/3,045.
Dealers said trading was slow and volume was thin throughout
the day, with the rupiah continuing to suffer from sustained
weakness in the region.
They said a strong recovery in the stock market might have
improved sentiment, but further falls in the baht and the
Malaysian ringgit kept the rupiah below the 3,000 level.
One local bank chief dealer said Singapore players started
releasing their dollars after the government announced the
measures and helped bring the rupiah up to 2,995.
But then domestic corporates and banks quickly bought cheap
dollar and forced the rupiah to again cross the 3,000 level, he
said.
"The appetite for dollar remains strong among local
corporates. I think their confidence on rupiah has not returned
yet even after the government announced some measures to
reinvigorate the economy," he said.
The market was injected a fresh liquidity from the maturing
Bank Indonesia Certificates (SBIs) totaling Rp 855 billion.
The central bank had channeled liquidity credits to 52
troubled banks, which then helped ease liquidity in the market, a
dealer said.
Interbank rates fell again yesterday, with overnight rupiah
dropping to 25 percent from 60 percent in the morning and one-
month to 35 percent from over 65 percent.
However, the central bank maintained its rates for bilateral
SBIs yesterday. The bank did not accept short-term securities
(SBPUs) and also did not hold an SBI auction.
One-month swap was at 65/85, two at 110/150, three at 155/180
and six at 290/310 points. (aly/rid)
Cement -- Page 10