Subdued trading in local stock market expected
Subdued trading in local stock market expected
JAKARTA (JP): Stock trading is likely to be subdued again this
week, despite signs of recovery emerging before the markets
closed last week.
Securities analysts said that signs of bullish trading were
seen before the close of trade last week, with a number of big
buyers entering to market to test the trading atmosphere.
"The phenomenon will not be repeated this week, with most
likely to sit back to watch the market's reaction to their move,"
one analyst said.
Analysts said that big investors were waiting for the right
moment to renter the market.
"Since there is no fresh news, foreign funds will not be
tempted to stay here for long," Mashill Jaya Securities sales
manager Antonio Yongnata said on Saturday.
"As a result, our stock market will remain stagnant," he said.
The battered local bourse became the star performer in the
Asian region on Thursday after thin trading earlier in the week.
The main price index rose 7.2 percent to 457.94 on the back of an
inflow of fresh offshore funds following the government's
announcement of the 1999/2000 draft state budget on Tuesday.
However, the buoyant mood did not last long, with stock prices
sliding 4.03 percent to 439.49 on Friday after speculative
investors cashed in profits made on the previous day.
"It is not good to see the market swinging from one extreme to
the other. Things have become so speculative now," said Vonny
Juwono, an institutional sales broker with Trimegah
Securindolestari.
Stock brokers said profit taking could continue in the early
part of this week, putting further pressure on the market.
"But the main price index will not go below the key 400 point
level in the foreseeable future," one broker said.
Stock analysts and brokers said that with no end in sight to
the political and economic uncertainty bedeviling the country,
the local financial market would continue to depend heavily on
the direction of other equities markets in the region.
"If regional markets rise, our market will possibly follow
suit. And likewise, if other regional markets fall, our market
will slide too," Vonny said.
Antonio said that offshore fund managers were reluctant to
invest here because of severe political and economic uncertainty
here.
He said that last week's trouble in Aceh and Karawang in West
Java painted a grim picture of the situation here to investors
considering a return to the country's beleaguered financial
markets.
Analysts said that although riots now had little direct impact
on the local financial markets, foreign fund managers were still
greatly concerned over social and political developments here
ahead of the general election in June and presidential and vice
presidential elections in November.
"The possibility of political upheavals in the run up to next
year's elections will cast a shadow over all trading in the
financial markets here," BNI Securities head of research Adrian
Rusmana said.
Riots broke out in Karawang, West Java, on Friday after angry
mobs hurled stones at police stations and looted shops.
Despite the unrest, the Jakarta Stock Exchange (JSX) main
price index rose 10.41 percent (41.46 points) to 439.49 last week
compared to 398.03 the previous week.
Daily average turnover rose by over 100 percent to 314.43
million shares last week compared to 129.13 million shares in the
previous week.
Financial analysts and dealers said that the outlook for the
beleaguered rupiah would remain steady.
The rupiah closed at 7,950 on Friday compared to its close at
8,050 at the end of trading the previous week. Currency dealers
said it was unlikely that the rupiah would move much in the
coming week.
"The rupiah is expected to trade at around 8,000 prior to the
Muslim Lebaran holiday," a chief dealer with a joint venture bank
said. (aly)