Stocks, rupiah to benefit from Mandiri IPO plan

Dadan Wijaksana, The Jakarta Post, Jakarta

As overall sentiment remains positive, the Jakarta Composite Index is expected to resume its upward trend this week from a slight decline posted last week, said a dealer.

"The decline (in last week's trading) had nothing to do with market sentiment. It was more investors waiting for fresh news, which could be seen from the daily trading average.

"With sentiment relatively unharmed, I think the index has a good chance of rising again, maybe to a level of about 515 points," a stock dealer told The Jakarta Post over the weekend.

The index ended last week at 506.78 points, down 0.9 percent from 511.45 the week before.

She added that the index would also take advantage of an expected bullish sentiment toward the rupiah, propelled by the initial public offering (IPO) of state-owned giant Bank Mandiri this week.

The only obstacle that could derail the index's performance, the dealer said, was the case surrounding publicly listed state telecommunications firm PT Telkom.

"If we do not get a clear message from Telkom that there will not be a problem in the future over its financial report auditing, then there is a strong chance that it will hamper the index," she added.

Telkom appointed PricewaterhouseCoopers (PwC) to audit its 2002 financial report -- to avoid the delisting of its shares in the U.S. stock market -- but since the audit process might take more than two months, concerns abound that Telkom will not be able to meet the July 15 deadline set by the U.S. Securities & Exchange Commission.

Meanwhile in the currency market, a healthy demand for the rupiah, expected from the Mandiri IPO plan, will push the local currency higher against the U.S. dollar, a currency dealer said.

The rupiah finished the week lower at Rp 8,290 to the dollar, compared to Rp 8,240 the week before.