Year-end window dressing may prop up share prices
JAKARTA (JP): Year-end window dressing by fund managers will probably have a positive impact on share trading on the local market this week, analysts said.
Analysts said that many big fund managers would reenter the market this week and make some purchases to prop up prices of popular stocks, especially those representing the majority of their local equity portfolios.
"Such window dressing is an important strategy for fund managers to improve the overall performances of their equity," Sigma Research director Jasso Winarso said on Friday.
He said that even though the Indonesian government was currently coping with the worst political and economic crisis of the last three decades, there would be an influx of short-term offshore funds from overseas investment houses this week.
"The main price index will likely hit the 450 level by year- end," he said.
Stockbrokers agreed, saying that certain investment houses had been seen placing huge buying orders on selected second-line stocks last week as part of their efforts to make up their asset portfolios by the end of December.
"We have seen certain foreign investors placing buy orders to polish their portfolios," Vonny Juwono, an institutional sales broker with PT Trimegah Securindolestari, said.
Other stock analysts said that even though antigovernment protests would likely continue in the capital in the coming week, it would not adversely affect the market sentiment in the local bourse as such protests had become a common sight for most local investors.
Stock analysts said that the rise in share prices this week would also be due to a further decline in deposit interest rates,
In addition, an expectation that the U.S. Federal Reserve would cut its interest rates by another 0.25 percentage points to 4.5 percent in the coming weeks might also help boost market sentiment, the analysts said
The Fed is expected to hold it Federal Open Market Committee (FOMC) meeting on Dec. 18 to discuss the possibility of further lowering its interest rates.
Head of research of BNI Securities Adrian Rusmana was, however, more pessimistic.
He said local share prices would continue to be under severe pressure considering the absence of fresh incentives which could prompt investors to make significant purchases.
Currency dealers estimated that the rupiah, which was relatively stable at the 7,000 level against the U.S. dollar last week, would not move much in the coming weeks.
The rupiah closed unchanged at 7,500 on Friday last week compared to 7,525 the previous week.
Dealers said that the rupiah, which had been traded in very narrow ranges of between 50 and 100 rupiah, would continue to hover around the 7,500 in the coming weeks.
"There is not much news to bolster sentiment on the rupiah. It is expected to be traded between 7,000 and 8,000 level through the end of this year," a chief dealer with a joint venture bank said.
The Jakarta Stock Exchange (JSX) rose 3.8 percent to break through the 400-point level to 405.59 last week compared to 390.39 the previous week.
Average daily trading volume, however, fell to just 245.20 million shares changing hands against 283 million shares the previous week.
Average daily transaction value also declined, to Rp 222.43 billion last week compared to Rp 237.91 billion the previous week. (aly)