Telecom shares to dominate trading on JSX this week
JAKARTA (JP): Trading on the Jakarta Stock Exchange is expected to remain flat for the remainder of the year with most large institutional buyers staying on the sidelines during the holidays.
But most analysts believe the Jakarta Stock Exchange (JSX) Composite Index will gain ground this week thanks to telecommunications shares, which they predicted would again dominate trading this week.
"The government's promise last week to let go of its majority control in blue chips PT Telkom and PT Indosat incited the market last week and will likely continue to cause positive sentiment," an analyst with a foreign brokerage house said during the weekend.
Telecommunications shares, accounting for some 20 percent of the Composite Index, will certainly give strong support to the index, he added.
Shares of state-owned PT Telkom closed last week at Rp 3,500, a gain of 2.9 percent from the previous week.
State-owned PT Indosat's shares rose significantly by 36.3 percent to close the week at Rp 14,175 from Rp 10,400 the previous week.
The government announced last week it would lower its stake in the telecommunications sector, even hinting at the prospect of relinquishing its majority position to the private sector.
Analysts said investors saw a brighter future for telecommunications companies if the private sector was allowed to take majority control.
"There would be more business prospects and greater transparency in the hands of private parties," one analyst said.
The managing director of Harita Securities, Christina Lim, said telecommunications shares would continue to raise the mood of the overall market in the coming week.
"Good sentiment on telecommunications shares will continue, but there will also be profit taking along the way," she said.
"I believe the market will be mostly stagnant or higher next week," Christina said over the weekend.
She said blue chips and strong fundamental shares would continue to keep investors' attention even with the end of the year approaching.
However, she said local investors holding these blue chips could be expected to sell their shares for profits.
"As long as there is an opportunity to make a profit they will sell the stocks now, even if its only for a small gain," she said, adding that these investors were quick to reenter the market after taking their profits.
Other analysts said profit taking was more likely in non- telecommunications blue chips which had booked recent gains.
Christina also said trading volume would likely be lighter than last week because the typical year-end slowdown in trading was beginning to be felt.
Investors are taking their holidays and will not be back until January, she said.
Meanwhile, analysts predicted the rupiah would continue its sluggish trade next week as dealers were reluctant to enter the market during the Muslim fasting month of Ramadhan.
"Slow trade is ahead as speculation will be very limited," a dealer said.
Dealers do expect significant activity from market participants who need U.S. dollars for year-end interest payments on bank loans.
The JSX Composite Index increased by 3.3 percent to 633.83 points last week, from 613.48 the previous week.
The average daily turnover last week increased to 542.2 million shares, compared to 471.6 million the previous week.
The average daily transaction value increased to Rp 807.32 billion last week from Rp 522 billion the week before.
Last week's top gainers were PT Zebra Nusantara, rising 50 percent, PT Samudera Indonesia (46.67 percent) and PT Asuransi Bintang (38.89 percent).
The week's losers were PT Dharmala Sakti Sejahtera, down 28.57 percent, PT Pudjiadi Prestige Limited (25 percent) and PT Bukaka Teknik Utama (21.43 percent).
The top brokerage firms by transaction value were PT Asia Kapitalindo with Rp 750.7 billion, PT GK Goh Ometraco (Rp 739.7 billion) and PT Danareksa Sekurities (Rp 330.1 billion).
The rupiah increased slightly to close the week at 7,225 against the U.S. dollar, compared to its 7,242 close the previous week. (udi)