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Jakarta Post

JCI up but logs as 7th worst in region

After being the third best bourse in the region last year with the index jumping up by 52

Ika Krismantari, (The Jakarta Post)
Jakarta
Wed, December 31, 2008

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JCI up but logs as 7th worst in region

After being the third best bourse in the region last year with the index jumping up by 52.08 percent, the Jakarta Composite Index (JCI) has now been designated, by contrast, as the seventh worst performer in the region, though the benchmark gained some strength in its last trading day on Tuesday.

Data from the Indonesia Stock Exchange shows the index plunged by 49.3 percent during the year to a level of 1,355.89 from 2,745.82 recorded at the 2007 closing.

However, the decline is considered by many as fairly modest compared to the worst performers -- Shenzen and Shanghai in China, followed by Mumbai Sensex in India, Hangseng in Hongkong, Straits Times in Singapore, and Weighted Taipei in Taiwan.

The JCI market capitalization also fell 45.8 percent to Rp 1,076 trillion (US$98.99 billion) from Rp 1,988.3 trillion in 2007 following the regional market collapse, which slashed share values in the past three months.

But the IDX's daily transaction value rose slightly 4.17 percent to Rp 4.45 trillion from Rp 4,27 trillion, a record the Indonesia Stock Exchange (IDX) president director Erry Firmansyah cited as "an extraordinary achievement" in the midst of the financial crisis and global downturn.

Tuesday's closing prices also gave market players and investors new hopes for a better performance next year, as the main index rose slightly 1.08 percent to 1.355,41.

Finance Minister Sri Mulyani Indrawati, who attended the closing ceremony, regarded the year of 2008 as a year of major challenges while remaining upbeat on the outlook for the bourse next year as firms were now more prepared to cope with the impact of the global economic slowdown.

"There will be another consolidation (process but) basic activities (of the economy) will not be disrupted...," she said.

The government has targeted economic growth for 2009 at between 4.5 and 5.5 percent, lower than the 6.1 percent growth achieved this year.

For this reason, IDX has set conservative targets for next year, aiming for only 15 companies to go public and for a daily average transaction value in the region of only Rp 2.75 trillion, half than last year's targets.

This year, 19 companies actually went for an initial public offering (IPO), out of the 25 firms targeted to do so.

In a bid to shore up confidence and boost transactions, the IDX has decided to shift the auto rejection policy to the old scheme in which an automatic shutdown on share transactions will be based on the share's market capitalization value and whether it is included in the list of bluechips.

For blue chip companies with big market capitalization value, the caps will be lower than for those which are not on the list. This is to avoid calamitous volatility.

The market will be opened again on Jan. 5 and President Susilo Bambang Yudhoyono is scheduled to open the first trading of the year.

Unlike in developed countries, Indonesia's stock index could not be used to help assess the whole economy as the listed companies are considered by analysts as too few in relation to the size of the economy and are not yet very varied in terms of the range of sectors represented.

The index is also dominated by institutional investors rather than individual investors, with less than 1 million Indonesians investing in stock.

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