Trading activities hoped to be bullish this week
JAKARTA (JP): Trading activities on the Jakarta Stock Exchange (JSX) are expected to be bullish this week following the conclusion of three weeks of negotiations between the government and the International Monetary Fund (IMF), analysts said.
They said the signing of the new agreement with the IMF late last week should encourage investors to reenter the market.
"The signing of the new deal should boost investor confidence in the local market," research director of Socgen Crosby Securities Goei Siauw Hong told The Jakarta Post over the weekend.
He said the market had been anxiously awaiting the announcement of full details of the new measures to be taken as part of the government's efforts to improve the country's dire economic situation.
The IMF and the Indonesian government signed up to a 20-point supplementary program of economic and financial reform last week, which revised the 50-point memorandum of understanding signed by President Soeharto on Jan. 25.
The new agreement includes commitments from the Indonesian government to draft bankruptcy and anti-monopoly laws, form a special court to oversee bankruptcy proceedings, and develop a plan to resolve the problem of US$74 billion in foreign debt which is crippling the country's corporate sector.
The government moved instantly to implement some of the promised reforms by announcing preliminary measures to be taken on corporate debt, the merger of two state bank, and the establishment of a company to manage ailing banks' assets.
Companies are now obliged to report offshore debts to Bank Indonesia, the central bank.
An analyst with a joint-venture brokerage house said that the move would provide investors with a better insight to private sector debt, which has been identified as a major cause of the economic crisis.
"It will also help investors with their portfolio strategies in the local exchange," he said.
The JSX composite price index fell 1.07 percent to 527.58 points last week, down from 533.30 points the week before.
Daily turnover for the three trading days last week averaged 491.39 million shares, compared to the 549.45 million shares which changed hands the previous week.
Average daily transaction value declined to Rp 551.46 billion (US$68.93 million), down from Rp 639.02 billion the previous week.
Local stock and currency markets were only open for three days last week. The market was closed Tuesday for the Moslem Idul Adha holiday and on Friday for Good Friday.
Most blue chip stocks ended lower last week, with state-owned satellite operator PT Indosat sliding by Rp 575 to Rp 12,825, cigarette maker HM Sampoerna by Rp 725 to Rp 6,775 and its competitor Gudang Garam by Rp 700 to Rp 11,500. (aly)