Trading activities on JSX set to remain lackluster

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)