Stocks seen as flat this week
A'an Suryana, The Jakarta Post, Jakarta
The Jakarta stock market is expected to move lower this week due to a combination of domestic and international factors, according to an analyst.
"The stock market is expected to be flat to lower as the momentum to jack up the stock index is over," stock analyst Eddy S. Widjojo told The Jakarta Post over the weekend.
On the international front, the Jakarta stock market could remain under pressure this week amid jitters over a possible attack on Iraq by the U.S.
Eddy explained that the uncertainty triggered by the possibility of an attack on Iraq was causing nervousness among equity investors worldwide, prompting them to unload stocks. This had also affected the mood on the Jakarta stock market.
On the domestic front, a recent financial fraud plaguing the Jakarta Stock Exchange had deterred investors from injecting more funds into the stock market.
The financial fraud has centered on the manipulative transaction of shares of PT Dharma Samudera Fishing Tbk and PT Primarindo Asia Infrastructure Tbk., which dragged two local brokerage firms to default status.
The alleged perpetrators have been detained by the police. The case has created negative sentiment among stock investors.
"The stock index is expected to hover around 400 to 410," Eddy said.
The Jakarta stock market has been in decline during the past four weeks. In early September, the Jakarta Stock Exchange composite index fell to 427.8, continuing to fall to 421 and 408.79 in the following two weeks.
The index rose slightly again to 412.97 last week. However, should Eddy's forecast prove correct, the index would fall again.
Meanwhile, in the currency market, the rupiah was expected to hover around the same level as last week, given a lack of fresh leads, a currency analyst said.
"We haven't noticed any positive sentiment that could increase investor appetite to buy the rupiah," said Wiwan Wiradjaja.
Amid the absence of good news on the domestic front, Wiwan predicted that investors would remain on the sidelines this week.
As a result, the rupiah would be traded within a narrow band of Rp 8,950 to Rp 9,100 per U.S. dollar.
On Friday, the rupiah ended flat (at Rp 9,015) in quiet trading as Bank Indonesia continued to protect the local currency from a rising dollar, boosted by demand from local companies, Dow Jones Newswires reported.
Local companies, entangled in US$60 billion of offshore debts, bought the dollar to pay maturing debts they had obtained from international lenders prior to the 1997 Asian financial crisis.