Wall Street recovery to support JSX stocks

JAKARTA (JP): Analysts mostly feel uncertain on share price movements this week as Wall Street's performance will be the key factor in foreign fund managers' decision on whether to come back to the Jakarta Stock Exchange (JSX).

"I think a large amount of foreign funds was drawn out of the JSX on Friday following a price drop on Wall Street as investors immediately reacted to the announcement of the (decreased) unemployment rate in the United States," Nadjib Usman from PT Sanyo Primarindo told The Jakarta Post over the weekend.

He said that a drop in the unemployment rate means a stronger economic growth during the first quarter in the United States. And it gave a signal for a possible increase in interest rates which will make equity investment less attractive.

"It is normal that the JSX became very weak today because regional markets also slipped on Wall Street's correction. I think next week activities will also be driven by Wall Street," a dealer from PT Baring Securities Indonesia, Darwin, told the Post on Friday.

Nadjib said that the JSX might recover this week if foreign funds come back to the market.

"Local investors have become very active so far but Friday's plunge has shocked them. What they are going to do is wait until foreigners get back to the market," he said. "The market may further decline to its support level of 600 points this week if the situation doesn't change."

The analysts also noted that the performance of Telkom's shares will have significant influence on the whole market .

Nadjib said the lower opening price of Telkom on Friday, following a drop on Wall Street, surprised many local investors.

The situation got worse when big investors took profits on big shares which had been stagnant during the previous few weeks.

Telkom was down 7 percent to close last week at Rp 3,650 from Rp 3,925 at the week's opening, with 27 million shares changing hands worth Rp 105 billion (US$44 million).

Darwin said that foreign investors may anticipate the offering of Telkom's new shares as promised by the Indonesian government.

"I think they are preparing for the planned share issuance. It's normal for share prices to decline in any cases of new share issuance," Ignasius Yonan from PT Sigma Batara said.

The chairman of the Jakarta Brokers Club, Nurkhamid Akhmad, predicted that there might be a technical rebound on big cap stocks this week.

"It often happens that at a certain price level, weakening stocks get support. And I think stocks like HM Sampoerna, Indosat and Telkom will recover this week," Nurkhamid told the Post.

Transactions

JSX share prices dropped by 3.2 percent with its composite index closing the week 20.1 points lower at 608.1 last week due mainly to the correction of blue chip stocks.

The JSX booked total transactions of 327 million shares at Rp 952 billion last week.

Foreign buy transactions reached Rp 615 billion, against the sell transactions of Rp 622 billion.

A textile company, Karwell Indonesia, was recorded as one of the most active stocks with nine million shares traded at Rp 29 billion on the news that the company would issue bonus shares.

The Karwell share price was up 15 percent to close the week at Rp 3,400.

Two beer brewers were recorded as top gainers last week. Multi Bintang rose 40 percent to Rp 11,200 while Delta Djakarta increased by 34 percent to Rp 7,000 at the week's close.

Nurkhamid said that the two companies planned to issue bonus shares.

Bank Danamon dropped 32 percent to Rp 2,425 following a report on the bank's plan to issue 360 million new shares through a limited offering.

Barito Pacific Timber was also among last week's top losers, recoding a drop of 13 percent to Rp 2,025, on the negative earning report for the whole of 1995.

The top 10 stocks in terms of transaction value were Telkom (with total transactions of Rp 105 billion), followed by Semen Gresik (Rp 38 billion), Indosat (Rp 34 billion), Indah Kiat Pulp and Paper (Rp 33 billion), Citra Marga (Rp 33 billion), Astra (Rp 32 billion), Karwell (Rp 29 billion), JIHD (28 billion), HM Sampoerna (Rp 27 billion) and Bimantara (Rp 25 billion). (alo)