Window dressing on JSX to continue this week

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)