Trading activities on JSX expected flat this week

JAKARTA (JP): Trading activities on the Jakarta Stock Exchange (JSX) are expected to be flatter this week, with many investors tracking sideways, analysts and brokers said.

"If not less busy, the market will remain flat like the previous week," managing director of Harita Securities, Christina Lim, said over the weekend.

She said that many other regional markets were also experiencing the same trend and would remain so this week.

A senior analyst from Pentasena Securities, Edwin Syahruzad, said that most foreign investors, who had entered the local market since the end of the general election in late May, had shifted their investment to other markets in the United States and Europe over the last two weeks.

"But that is something natural and nothing to worry about," he said.

He said despite the switch, JSX would remain one of the most attractive markets in the region, given the country's sound macroeconomic condition.

"The country's economy shows positive signs," he said.

Stock dealers said that besides an improvement in the economy, the strong corporate performance in the first quarter would also be a reason why there would be more foreign investors entering, rather than leaving, the country's capital market.

"Those who have left will soon reenter the market in the next couple of weeks and this will incite trading activities," Edwin said.

What's more, he said, Minister of Finance Mar'ie Muhammad's statement about the country's seven state banks possibly merging into four was received by the market on a positive note, especially by banking sectors.

"The move is expected to make the country's banking sector strong," he said.

Bankers also welcomed the move saying that the merge would eventually improve bank competitiveness in facing the liberalization era in the next few years.

Even so, Edwin Bank Negara Indonesia's plan to acquire debt- ridden Bank Pacific, jointly owned by the central bank, Bank Indonesia and the Ibnu Sutowo family, could be a burden to BNI.

"It will have a negative effect on the market," he said adding that it, however, would eventually depend on the price and the scheme of the acquisition.

According to unconfirmed reports last week, BNI, the only listed state-owned bank, would acquire ailing Bank Pacific.

The JSX composite index rose 3.60 points to close at 698.62 points last week from 695.02 points in the previous week.

Despite the increase in the local main price index, total daily volume and value fell considerably last week due to dull transaction activities in the market, dealers said.

The average of total daily turnover declined by 28 percent to 228.2 million shares last week from 296.04 million shares in the previous week.

"The 28 percent decline showed how dull the market was," one analyst from a joint-venture securities house said.

Total daily transaction value also fell by 33 percent to Rp 416.1 billion (US$170.2 million) last week from Rp 556.87 billion in the previous week.

Foreign investors were still attracted to the remarkable performance of some blue chip stocks in the first quarter.

The country's telecommunications firm PT Telkom gained Rp 25 last week to close at Rp 3,975 while satellite operator Indosat slipped Rp 50 to Rp 7,400. Cigarette maker Sampoerna fell Rp 350 to Rp 10,000, as competitor Gudang Garam shed Rp 50 to Rp 10,300.

BNI lost Rp 25 down to Rp 1,600, while Bank Internasional Indonesia climbed Rp 50 to Rp 2,000. (09)