Stocks rise 6.4%, rupiah remains firm

JAKARTA (JP): Share prices in the local stock market rose sharply on Friday, with the main price index breaking through the 400 level for the first time in two months, securities dealers said.

The dealers attributed the rare price rally on massive buying of a number of blue chip stocks.

Bullish sentiment in the regional equity markets coupled with a steady rupiah-U.S. dollar exchange rate and a relatively calm situation on the country's political fronts had prompted the buying mood, a dealer said.

"We are really surprised with the sharp increase in share prices today," said Vonny Juwono, a dealer with Trimegah Securindolestari.

The Jakarta Stock Exchange's Composite Index rose 24.53 points or 6.4 percent to end the week at 403.65 in active trading, with total trading volume reaching 581.28 million shares worth Rp 491.91 billion (US$65.74 million).

Gains led losses by 137 to 11 with 49 stocks remaining unchanged.

Securities analysts said that the absence of massive antigovernment demonstrations during the day encouraged investors to place big orders, especially on large capitalized stocks.

Fitri Murniati, an analyst with BNI Securities, said that news that the U.S. Federal Reserve was to further cut interest rates also helped fuel the buying sentiment.

Trimegah's Vonny said many foreign brokerage firms, which halted trading in the past few days due to political uncertainty at home, reentered the market and bought big capitalized stocks with strong fundamentals.

They included Merryl Lynch Indonesia, Credit Lyonnais Capital Indonesia and GK Goh Ometraco.

Most blue chip stocks rose with telecommunication firm PT Telkom rising Rp 50 to Rp 2,825, Tjiwi Kimia gaining Rp 100 to close at Rp 1,825, mining firm Tambang Timah also rising by Rp 200 to end the day at Rp 6,850 while Aneka Tambang pocketed a Rp 125 gain to close at Rp 1,750.

BNI's Fitri said that investors shrugged off the lingering political uncertainties at home as student demonstrations had obviously lessened.

Many students still rallied in the country's major cities but no violence was reported.

"Such peaceful rallies will not adversely affect the market sentiment," she said.

The rupiah managed to close firmer at 7,500 against the U.S. dollar on Friday.

Currency dealers said that the rupiah, which dropped to as low as 15,000 against the American dollar in May at the height of the political crisis, was no longer much affected by political issues.

"The market just shrugs off the news of protest after it managed to withstand the bloody clashes last week," a chief dealer with a joint venture bank said.

Currency dealers said, however, that trading activities remained lackluster due to the absence of fresh market-moving leads ahead of the weekend.

The bullish sentiment on the rupiah was expected to continue if peaceful students rally did not turn into bloody violence in the coming days, currency dealers said.

"The rupiah is expected to surge to the 7,000 level if there is no further violence," a dealer said. (aly)