Stocks jump on stable political situation
Stocks jump on stable political situation
JAKARTA (JP): Stock prices on the Jakarta Stock Exchange (JSX)
rose for a second consecutive day yesterday, with the main price
index gaining 4.4 percent at the close of trading.
Stockbrokers said foreign and local investors were upbeat with
the stable political and social situation during the General
Session of the People's Consultative Assembly to elect a
president and vice president.
"Stock trading is active as the market feels secure with the
stable political and social situation during the General
Session," said Surya Martara, head of sales at UBS Securities.
He said worries over political and social instability had
faded due to the absence of any major social or political
protests during the ongoing Assembly meeting.
Foreign brokerage houses were mixed during yesterday's trading
as some of them, including Jardine Fleming Nusantara, Merrill
Lynch and Credit Lyonnais, were net sellers while other foreign
houses like Indosuez WI-Carr and OSBC Securities were net buyers,
he said.
Brokers also said most foreign investors made large purchases
of tobacco stocks like Gudang Garam and HM Sampoerna on market
talks that the cigarette makers would increase their retail
prices to pair the government plan to reduce its excise tax.
Gudang Garam's stock price rose Rp 1,375 to Rp 13,725 on a
total volume of 5.48 million shares, while HM Sampoerna rose Rp
900 to Rp 6,625 on a total volume of 7.09 million.
Stockbrokers also said massive buying by foreign investors on
overseas listed companies like PT Telkom, Indosat and Tambang
Timah helped revive stock trading in the local market, pointing
to arbitrage trading in these stocks which would benefit from
domestic and foreign price differentials.
Telkom's shares rose Rp 250 to Rp 4,000 on a total volume of
12.78 million, while Tambang Timah rose Rp 425 to Rp 7,875 on a
total volume of 1.03 million and Indosat climbed Rp 675 to Rp
13,475 on 551,500 shares.
The JSX Composite Index closed 21.95 points higher at 518.686
from 496.72 points the previous day.
About 922.26 millions shares changed hands on the regular
market valued at Rp 1.07 trillion (US$120.22 million).
Stock analysts said yesterday the upbeat sentiment in the
local market could partly be attributed to market speculation
that the government's "IMF-Plus" program would gain support from
international and domestic investors.
"I think the local market perceived that the President's
accountability speech on Sunday showed a clear direction of how
the government will deal with the current economic turmoil," an
analyst with a local securities firm said.
The analyst said the market perceived that President
Soeharto's "IMF-Plus" program, which he announced in his
accountability address Sunday, would include large-scale
privatization of state-owned companies, a bankruptcy law,
reduction and rescheduling of external debt and the adoption of a
currency board system to fix the rupiah at a set rate against a
foreign currency.
As stock prices rose, the rupiah remained relatively stable in
the currency market closing at 8,950 against the U.S. dollar,
compared to its opening of 8,750/8,800 in the morning session.
Dealers said trade of the rupiah, which closed at 8,850 to the
dollar the previous day, remained thin as most operators moved to
the sidelines to wait for the conclusion of the General Session.
"I think the rupiah will likely remain below the 10,000 level
until the end of the meeting," a chief dealer with a local
private bank said. (aly)