Window dressing on JSX to continue this week

JAKARTA (JP): Year-end window-dressing by listed companies is expected to continue on the Jakarta Stock Exchange (JSX) this week, with a few foreign investors intensify their buying of selected blue chips in anticipation of January rises, according to analysts.

The analysts said window-dressing could be expected from the issuers of second-line stocks, with the diversified conglomerate Lippo Group being the most noticeable example.

"The (composite) index will be pushed up to between 680 and 690 this week partly due to the window-dressing," said Jasso Winarto of Sigma Research.

A number of corporations usually attempt to prop up the market price of their shares on the JSX at the end of the year in order to improve the image and perceived value of their companies.

This propping up is done by bidding on their own shares in the market, thus increasing the market price through artificial demand.

"The window dressing will also incite local retail investors to join the buying spree, giving more room for the JSX index to further increase," Jasso said.

Retail investors see second-line stocks as having the greatest possibility to book capital gain next year, another analyst said.

Jasso agreed with other analysts that shares from the Lippo Group were the most prominent of those involved in the window- dressing.

"Lippo Securities, Lippo General Insurance, Bank Lippo, Multipolar and retail chain Matahari have shown noticeable, strange gains lately," Jasso said.

Multipolar, for example, has gained about three times its value from a month ago, according to an analyst with a joint venture securities firm.

Jasso said the window-dressing would continue until the end of the year.

Share prices at the end of the year are recorded in companies' annual reports and frequently are used as a reference for companies' share prices throughout the next year.

The Composite Index will be pushed higher but it will not crack the 700 level, Jasso said.

He also said foreign players had begun buying select blue chips last week and would continue their buying this week and possibly into mid-January.

"They are anticipating the January effect next year," he said.

Jasso said like on other stock exchanges around the world, there is increased buying in January with large fund managers customarily purchasing a large portion of shares.

Analysts predicted the JSX would have a better-than-usual January effect next year, with the rupiah likely strengthening further to the 6,000 level amid the lessening of economic risks in Indonesia and improving macroeconomic indicators in the country.

Unlike the JSX, the rupiah is expected to remain caught in the year-end doldrums, hovering between 7,000 and 7,150 to the US dollar in thin trading this week, dealers said.

The rupiah strengthened slightly last week on increased foreign demand, but it was not clear that this demand would be sustained, most dealers said.

The rupiah at one point touched its intramonth high of 6,975 late last week as foreign fund managers bought the local currency for their recently increased equity investments in Indonesia, they said.

They said the rupiah was quick to rise because trading volume was so thin.

"But some local players started to buy the dollars as the greenback fell below the psychological 7,000 level," one dealer said.

Most banks will have their last currency trading day of the year on Tuesday, another dealer said.

The JSX Composite Index increased by 4.3 percent to 666.13 points last week, from 638.82 the previous week.

The average daily turnover last week increased to 882.4 million shares, compared to 670.6 million the previous week.

The average daily transaction value increased to Rp 695.32 billion last week from Rp 660.8 billion the week before.

Last week's top gainers were PT Multipolar, rising 94.74 percent, PT Semen Cibinong (78.57 percent) and PT Bumi Modern (71.43 percent).

The week's big losers were PT Miwon Indonesia, down 38.46 percent, PT Prima Alloy Steel and PT Zebra Nusantara (both down by 25 percent).

The top brokerage firms by transaction value were PT Lippo Securities with Rp 539.5 billion, PT Harita Kencana Securities (Rp 355.4 billion) and PT Bhakti Investama (Rp 232.1 billion).

The rupiah increased very slightly, closing the week at 7,015 against the US dollar, compared to its 7,045 close the previous week. (udi)