Trading outlook upbeat despite profit taking

JAKARTA (JP): The buying mood on the Jakarta Stock Exchange (JSX) is expected to remain strong despite a profit taking which hit several big shares at the end of the week.

Most securities analysts told The Jakarta Post over the weekend that a correction in midweek was normal and would not affect this week's buying sentiment.

"After a strong rally, the index declined at the end of the week and it was normal," one of them said.

Laksono D. Widodo, an analyst at ING Barings Securities Indonesia, said over the weekend the buying mood would remain strong this week despite the fall in several big shares at the end of last week.

"The market will stay strong," he said.

DBS Investment Research, however, said the market had been "overbought", indicating the surge in the index had exceeded the ideal level.

"With the market overbought, we recommend taking profits," DBS said in its weekly review.

The Jakarta Stock Exchange index closed 2.3 percent or 14.94 points higher to 678.91 against last week's 663.97. The index recorded an all-time high of 688 Wednesday to surpass the previous high of 681 way back in April 1990.

The trading volume increased to 301 million of shares compared to last week's volume of 235.6 million shares.

While the transaction value rose to Rp 632.46 billion from last week's Rp 476.40 billion.

Most analyst and dealers agreed JSX improved performance was driven by increased buying orders from foreign investors, who at present control over 70 percent of the transactions.

Performances

They aslo attributed the increase in index to the strong performances of blue chips such as HM Sampoerna, Gudang Garam, PT Telekomunikasi Indonesia, Indosat, Astra International, Bimantara Citra and BNI Bank.

Banking stocks remained the most favored stocks for both foreign and local investors, said Jasmine Tedja of HSBC Securities.

Bank BNI rose by Rp 275 to close at Rp 1,625 with a total volume of 365.9 million shares compared to the previous week's volume of 185.2 million.

Bank Danamon gained Rp 300 last week to close at Rp 2,550 compared to the previous week's Rp 2,250, Bank Niaga rose by Rp 500, while Bank International Indonesia lost Rp 125 from Rp 1,875 in the previous week's ending to Rp 1,750 last week.

BDNI, owned by Gajah Tunggal Group, which held its shareholders general meeting last week to announce its rights issuance, was one of last week's three top gainers. BDNI gained 17.5 percent while the other top gainers, Trias Sentosa (23.3 percent) and Sekar Bumi (20.3 percent).

HM Sampoerna rose by Rp 175 to Rp 14,250 last week from the previous week's Rp 14,075, while its competitor Gudang Garam dropped by Rp 350 to Rp 11,400 in the previous week.

State-owned telecommunications company PT Telkom's shares rose by Rp 100 to close at Rp 4,100 last week against Rp 4,000 in the previous week. Indosat dropped by Rp 25 to close at Rp 7,000 last week while Bimantara surged by Rp 125 to Rp 3,275 against last week's Rp 3,150. Automaker PT Astra International advanced Rp 150 to Rp 6,300.

Among the most remarkable stocks were Zebra Nusantara which rose 84 percent, or by Rp 2,150, to close at Rp 6,900. Centris Multi Perkasa rose by Rp 925 to close at Rp 2,675, up 52 percent.

Analysts said the sharp increase in Zebra's shares was incited by the Surabaya-based transportation company's reports to add to its fleets.

Laksono noted that the buying sentiment on cigarette-makers' stock was likely to slow down this week as investors had expected to see an increase of over 10 percent in the level of wages announced by the government last week.

The government announced an average increase of 10 percent in workers' wages last week.

He said the 10 percent increase was not very significant and would pose no problem to labor intensive companies such as cigarette-makers.

"If the increase in labor wages was over 10 percent, the investors might have expected a high impact on cigarette-making companies' shares," he said.

He predicted strong buying activity on big cap stock like banking and telecommunications this week.

Last week the market saw a strong rally in early and mid-week due to high sentiment of foreign and local investors in the market.

Most analyst predicted the market's composite index could go higher this year, reaching 700. (09)