U.S. interest rates cut triggers JSX rally

U.S. interest rates cut triggers JSX rally

JAKARTA (JP): The U.S. Federal Reserve's decision to lower interest rates was the key factor which triggered strong rallies in the Jakarta and regional stock markets last week as share prices soared across the board.

The Jakarta Stock Exchange Composite Index closed the week at 509,14, a jump of 16,86 (3.42 percent) over the week's opening of 492.28.

Boosted by strong market sentiment, the index finally broke through the psychological barrier of 500, having traded within a narrow range over the last few weeks.

The up-beat sentiment also triggered rallies throughout the regional bourses. The Fed's move in trimming interest rate by 25 basis points was a strong and positive signal that the regional stock markets could be headed for a strong bull-run. This is due to the positive correlation of U.S. interest rates with domestic rates of most Asian countries, including Indonesia.

Meanwhile, the announcement of a 0.16 percent Indonesian inflation rate in June gave some solace that the government's single-digit inflation rate expectation is attainable.

Newcomer Sinar Mas Multiartha, the Sinar Mas Group's financial holding company, was actively traded, boosted by the strong performance of subsidiary Bank Internasional Indonesia. Bank Danamon continued to be well traded on persistent reports of large private placements on the bank's shares.

Over the short term, some profit taking is likely, although the up-beat sentiment appears sustainable over the next few months.

Local players' activities followed that of foreign investors' interests which included Barito Pacific Timber, Sinar Mas Multiarta, PSP, Gadjah Tunggal, Bank Duta, Bank Danamon, BDNI, Dharmala Intiland, Aneka Kimia Raya, Lippoland and Berlian Laju Tanker

Foreign investors traded across the board, particularly focusing on large-cap banking stocks, expecting to benefit most from the Fed's rate cut. Other counters which saw active trading by foreigners included Barito Pacific Timber, Sinar Mas Multiartha, Gadjah Tunggal, Indocement, Bank Danamon, Bank Tiara, BII, BDNI, Indofood, Lippoland and Lippo Bank.

The two rights issues which were listed last week included Bank Surya (1-for-1), offering 50 million shares at a price of Rp 1,200 each, and Bayu Buana (4-for-1), offering 96 million shares at Rp 1,000 apiece.

Average daily turnover on the regular board increased to 19.94 million shares worth Rp 70.6 billion (US$31.41 million) from 13.42 million shares worth Rp 42.63 billion the previous week. Last week's total turnover decreased to 176.06 million shares valued at Rp 647.06 billion from 237.68 million shares valued at Rp 737.42 billion the previous week.

Some of the best performers last week were Darya Varia (up Rp 1,100), Bank Internasional Indonesia (up Rp 1,025), Bank Niaga (up Rp 1,000), HM Sampoerna and Lippo Bank (each up Rp 925). The biggest losers were Langgeng Makmur (down Rp 575), Sepatu Bata and Bank Bali (both down Rp 500), Jababeka (down Rp 450) and Ometraco Realty (down Rp 300). Gainers outnumbered losers by 96 to 32, while 28 counters remained unchanged.

-- Sigma Batara