Trading on JSX to slow down this week as year-eand nears
JAKARTA (JP): Trading activities on the Jakarta Stock Exchange (JSX) this week will start slowing down as the year-end approaches, according to stock analysts.
They said demand on the JSX would be low as many fund managers would only take a sale position to wrap up for the year and calculate their annual performance.
"They are selling their holdings for a gain as well as for a cut loss, to calculate their performance for the whole year," said Dodi Prawira of Bapindo Bumi Sekuritas.
Dodi said the supply side would be affected as most fund managers were generally net sellers.
The JSX Composite index would close a little lower this week due to weak demand.
"It is a normal situation when it is approaching the end of the year," he said.
Dodi said, to some extent, the above weak demand would be offset by share price window dressing by small capitalized listed companies, which would likely start this week.
The management of the companies would like to push their company's shares up to make their performance look better and be recorded at the year-end , he said.
"They probably would like to see their price move up by three or four points by the end of the year," he said.
This window dressing would only be with shares of small caps, as it is possible to prop up these shares, according to Dodi.
The country's fundamentals -- indicated by recovering purchasing power, price stability and a lower inflation rate -- had appeased the market but with certain apparent limitations, Dodi added.
"The decreasing inflation rate is a good macroeconomic indication, but we have a lot of unsettled banking problems," he said.
Banking problems would certainly put some weight on trading this week, Dodi said.
He said the Bank Bali scandal was not resolved, and yet another huge banking scandal, involving state Bank Negara Indonesia (BNI), was following it.
The Bank Bali scandal centers around a Rp 546 billion transfer of commission money from the bank to a broker company owned by politically well-connected businessmen.
The BNI scandal involves a local textile and heavy machinery conglomerate, Texmaco Group, which allegedly received loans amounting to Rp 9.6 trillion (US$1.35 billion) from the state bank through incorrect procedures.
The latter scandal has come to the attention of investors who were already concerned with the Bank Bali scandal.
The country's bank restructuring program, being obstructed a few times by scandals, had yet to show concrete signs of positive impact, said Dodi.
"Those banks being recapitalized have to prove they can maintain their CAR (Capital Adequacy Ratio) above the required four percent level, so they can start lending as usual," he said.
CAR, a standard to measure a bank's financial soundness, is the ratio between the bank's equity and its risk-weighted assets.
The market would like to see the banking sector restart their lending normally again to the country's credit-thirsty industrial sector.
Other stock analysts said Aceh would still weigh on the JSX Composite index, as the government was judged by the market as too slow and too poor in handling the problem.
" The Aceh issue will continue to be an unsupportive factor for the market this week," an analyst said.
He said the market would now pay close attention to what follows the celebration of the anniversary of the Free Aceh Movement (GAM) over last weekend.
"We hope there will not be any civil unrest following GAM's anniversary," he said.
The JSX Composite Index increased by 2.8 percent to 613.48 points last week, from 596.35 points the previous week.
The average daily turnover last week decreased to 471.6 million shares, compared to 639.6 million the previous week.
But the average daily transaction value increased to Rp 522 billion last week from Rp 461.8 billion the week before.
Last week's top gainers were PT Putra Surya Perkasa, rising 100 percent, PT Sucaco (up 35 percent) and PT Zebra Nusantara, (up 33.33 percent).
The week's losers were PT Samudera Indonesia (down 33.33 percent), PT Primarindo Asia Infrastructure (down 23.68 percent) and PT Cipendawa Farm Enterprise (down 23.08 percent).
Meanwhile, the JSX last week de-listed plastic packaging company PT Aster Dharma Industri, belonging to Dharmala Group, due to its continuous deteriorating financial performance.
The exchange, on the other hand, included Bank Danpac as a listed company that started its first trading last week.
The top brokerage firms by transaction value were PT Credit Lyonnais with Rp 412 billion, PT Danareksa Sekuritas (Rp 337.5 billion) and PT Bahana Securities (Rp 233.5 billion).
The rupiah decreased by a half percent to close at Rp 7,242 to the U.S. dollar last week, compared to its close at Rp 7,205 the previous week. (udi)