Stronger rupiah may save stock prices from spill
Stronger rupiah may save stock prices from spill
By Wachyudi Soeriaatmadja
JAKARTA (JP): Renewed violence in some parts of the country and continued political instability will likely continue to undermine stock trading on the Jakarta Stock Exchange (JSX).
But equity analysts said that the expected rebound of the rupiah against the U.S. dollar would be able to save the stocks from taking another plunge.
The analysts said that recent violence reviving in Ambon and Aceh, which has cost the lives of many, added to investors' concerns about the country's stability.
Such developments were worsened by conflicting statements made by the elite policy makers to further upset the market, said director of PT Panin Sekuritas Hendra H. Kustarjo.
Another analyst added that the market was now in a stagnant to flat trend that even good news was not enough to give a boost to the stocks.
"Dividend increases and higher corporate earnings -- serving as a good sign of future gains -- usually fuel market sentiments. But this time it did not work that way," she said.
Many domestic corporate firms, as indicated in financial reports released recently, showed strong recovery in their 1999 earnings.
"But this strong earnings mood has not given the market a noticeable boost to date," the analyst said.
"Investors are not willing to reward these companies due to fears of the lingering political and security instability," she added.
However, Hendra said that shares on the JSX could at least be given a push this week over positive sentiments about the recovering rupiah, thus making selected stocks book gains.
"There could be volatile opportunities next week, but still with the overall market having no direction," he said over the weekend.
The rupiah closed flat last week at Rp 8,338 against the U.S. dollar, compared to Rp 8,380 the previous week, following the early part of the week where it lingered at the 8,500 level.
Currency dealers said state banks sold dollars at rates lower than the market rates late last week to prop up the rupiah's value following president Abdurrahman Wahid's call on state banks to help the local currency.
Currency and stock trading in the country was halted on Thursday to respect Waisak, Buddha's Day of Enlightenment.
"Trading volume was thin. It was not difficult for the state banks to intervene the market last week," a dealer said.
Many dealers expected the rupiah to fare better this week.
"The rupiah-dollar exchange rate should range between 8,200 and 8,500," a dealer said.
Hendra said there was hope of an equity market rebound if the rupiah continued to strengthen against the greenback this week.
"The strengthening rupiah last week should induce more participants in the currency market to reverse position from long to short dollar next week," he said over the weekend.
"The performance of the JSX, as we learned in the past, would mirror the performance of the rupiah," he said.
Other analysts said the market movement on the JSX this week would center around the stocks related to the changes of composition in the Morgan Stanley Capital Index (MSCI).
MSCI, in its periodic review conducted last week, added seven Indonesian stocks to the index composition but deleted 12 others.
The seven stocks recently included are, PT Aneka Tambang, PT Bhakti Investama, PT Duta Pertiwi, PT Makindo, PT Ramayana Lestari, PT Tempo Scan and PT Tjiwi Kimia.
And the 12 companies excluded from the MSCI are PT Apac Centertex, PT Argha Karya Prima, PT Darya Varia, PT Dharmala Intiland, PT Duta Anggada, PT Great River, PT GT Kabel Indonesia, PT Jafpa Comfeed, PT Pakuwon Jati, PT Surya Perkasa, Sierad Produce and PT Trias Sentosa.
The JSX Composite Index decreased 3.3 percent last week to close at 509.40 points, compared to 526.87 the previous week. The daily average transaction value also decreased, to Rp 522.73 billion last week, compared to Rp 540.53 billion the previous week.
The daily average turnover decreased to 394 million shares from 417.60 million shares the previous week.
Last week's top gainers were PT Asiaplast Industries, whose shares were up 52.04 percent, PT Tirta Mahakam Plywood Industries, 50 percent, and PT Bakrieland Development, 25 percent.
Cash dividend announcements were made by PT Astra Agro Lestari, PT Merk Indonesia and PT Maskapai Reasuransi Indonesia.
The week's big losers were PT Putra Surya Perkasa, which was down 33.33 percent, PT Argha Karya Prima Industry, 26.09 percent, and PT Dharmala Intiland, 25 percent.
The top brokerage firms by transaction value were PT Vickers Ballas Tamara with Rp 324.45 billion in transactions, PT GK Goh Ometraco with Rp 236.17 billion in business and PT Ciptadana Sekuritas which booked Rp 220.94 billion. (udi)