Trading activities on JSX set to remain lackluster
JAKARTA (JP): Trading activities on the Jakarta Stock Exchange (JSX) are likely to remain lackluster due to growing uncertainties in the currency market.
The rupiah fell to an historic low of Rp 3,125 against the U.S. dollar before settling at Rp 3,100/22 at close on Friday last week.
The rupiah's previous high decline was recorded at Rp 3,070 on Aug. 29 after the government floated the curency on Aug. 14.
"With the rupiah's fall in the currency market, we advise some investors to track sidelines," an analyst with a joint-venture securities firm said.
The analysts said that many investors were confused by the lack of the direction of trading activities in Jakarta's bourse.
"The trading activities had showed an improvement but fell again this week. Investors are confused with such a fluctuating direction," a broker said.
The analysts said that the market expected the government to ease its tight monetary policy, which had severely hit most of the country's business activities.
"The prolonged tight monetary policy and regional weakness would make investors even more frustrated," a sales manager with a local brokerage firm said.
Governor of Bank Indonesia, the central bank, J. Soedradjad Djiwandono, promised last week to further cut the interest rate to meet the market expectation.
Securities analysts hailed the move as a positive sign from the government to ease the tight liquidity.
"We believe that the government will continue with its efforts to cut the interest rate, especially the lending rates," Harry Danardjojo, managing director of sales of Lippo Securities told The Jakarta Post last week.
Securities analyst said that the central bank's move to cut the interest in the previous week was not strong enough to enliven market sentiment in the bourse.
Despite the gloomy market, brokers and securities analysts said some selective investors would continue to aggressively enter the market for "quality" stocks.
"Some choosy investors will continue to buy quality stocks though in small volume," Harry Danardjojo, managing director of sales of Lippo Securities told The Post.
An analyst with Rashid Hussain Securities said that among the quality stocks were Daya Guna Samudera, Fiskar Agung, Tambang Timah, Indosat.
Analysts said that these companies were better than others because most of their revenues were generated in American dollars.
"These stocks deserve to have a strong buy recommendation in the middle and long term period," one analyst said.
Share prices on the JSX reached their highest level on July 8, when the main price gauge reached 740.08 points. But the price index continued to decline since the Indonesian currency felt the domino affect of the Thai baht crash, which began on July 2.
The JSX Composite Index has dropped over 20 percent since then.
However, despite the slump, several shares continued gaining ground.
The share price of fish exporter Daya Guna Samudera, for example, had increased by 23 percent to Rp 5,375 on Friday last week compared to Rp 4,350 on June 28, Tambang Timah by 24 percent to Rp 4,625 last week from Rp 3,725 in late June, salt producer Fiskar Agung by 35 percent to Rp 5,375 last week from Rp 2,975 on June 28, and Indosat by 13 percent to Rp 8,125 last week from Rp 7,175 in the same period.
"While others declined, these stocks have recorded big gains. It means that choosy investors still have high expectations on these stocks," the analyst said.
The JSX composite index fell 3.31 percent with the index closing 18.841 points down to 549,920 last week.
Total daily average turnover rose 5.58 percent to 286 million shares changing hand last week compared to 270.86 million shares in the previous week.
Daily average value however rose 27 percent to around Rp 413.91 billion (US$140.30 million) last week compared to Rp 325.35 billion recorded in the previous week.
State-owned telecommunications company Telkom gained Rp 200 to Rp 3,550, while satellite operator Indosat by Rp 400 to Rp 8,125. Cigarette maker Gudang Garam gained by Rp 600 to Rp 9,100, while its competitor, Sampoerna, shed by Rp 125 to Rp 6,700.
Bank Internasional Indonesia gained by Rp 50 to Rp 975, Bank Negara Indonesia was unchanged at Rp 925, and Bank Dagang Nasional Indonesia gained 25 to Rp 700. (aly)