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