Mon, 14 Jul 2003

`Stocks to continue rising this week'

Dadan Wijaksana, The Jakarta Post, Jakarta

The Jakarta stock index is likely to rally further this week after a 4.1 percent surge last week on continued bullish sentiment, thanks in part to a successful initial public offering (IPO) by giant state Bank Mandiri, a stock dealer said.

"Mandiri's IPO has turned out to be as successful as was anticipated, which should provide good reason for the index to rise," the dealer said over the weekend.

The Jakarta Composite Index closed last week at 524.69 points, or 4.1 percent higher than the previous week's closing of 504 points.

Daily transaction volume average also increased to 725.32 million shares worth Rp 382.51 billion, as compared with 444.94 million shares worth Rp 298.14 billion the week before.

This represents the highest level in more than a year.

Thanks not only to Mandiri but also a sharp rise in other blue chip shares, notably PT Astra International, shares of the country's largest car producer, Astra, closed the week at Rp 4,100, the highest since it was listed in 1990.

After completing its three-day public share offering -- which, according to Bank Mandiri chief financial officer Keat Lee, was 14 times oversubscribed -- Mandiri is scheduled to be listed on the Jakarta Stock Exchange on Monday.

Due to the huge demand, the government was forced to increase the number of shares on offer from 15 percent to 20 percent, represented by around 4 billion shares.

The dealer said Mandiri's successful IPO would be the latest impetus for a further rise in the overall index, already buoyed up by a downward trend in the Bank Indonesia benchmark interest rate.

"A rise in the index is a strong possibility for this week, but I don't think it will be as sharp as last week. I think it will hover at around 530 points to 535 points," he added.

The central bank remains aggressive in slashing its benchmark rate, with the latest cuts bringing the rate to 9.30 percent. The move is aimed at both easing the government's burden in servicing its huge domestic debt and encouraging banks to cut lending rates so that the corporate sector can obtain cheaper loans.

In the currency market, meanwhile, the rupiah is expected to remain stable next week as the market awaits fresh news or incentives, although overall sentiment remains positive following pledges by the government to remain committed toward its asset sales.

"Do not expect rapid change for the rupiah. I think this week will remain at relatively the same level as last week, unless fresh news crops up," a currency dealer said.

The local unit ended at Rp 8,218 per dollar last week, weakened from 8,185 the week before.

However, sentiment on the rupiah should remain positive, as further asset sales, under privatization and divestment, were to continue attracting capital inflows, the dealer added.

Shares in Bank Lippo and Bank Rakyat Indonesia (BRI) will be on offer between now and the end of the year.