Jakarta – Jakarta stocks edged higher on Thursday, but the market was under pressure from rumours, later denied, that politically isolated President Abdurrahman Wahid would sack the armed forces commander in a bid to hang on to the leadership.
"We heard [military chief Admiral] Widodo would be sacked and that maybe Wahid would not appoint a replacement ... that is a worry," a dealer at a foreign brokerage said. New chief security minister Agum Gumelar later denied the rumours.
The Jakarta Composite Index gained 0.36 points or 0.09 percent to close at 397.96. Trading was light with turnover estimated at 352 billion rupiah ($31.44 million) down from 422 billion rupiah on Wednesday. Decliners outnumbered gainers 62 to 47 with 74 issues unchanged.
Indonesia's top legislature will consider impeaching Wahid over two financial scandals and his erratic 19-month rule when it meets in August.
"When the rumour came out the stocks went down but no particular stock pushed it back up in the end, it was probably more psychological with players saying the market is cheap," said Suhendra Setidi of Trimegah Securities.
He said market heavyweights PT Telkom and PT Indosat fell following news late on Wednesday the parliamentary telecommunications commission rejected the government's proposal for a planned phone price hike. "This prevented the index from making bigger gains," he said.
State-run domestic phone operator Telkom fell 50 rupiah to 2,775 while international phone operator Indosat lost 250 rupiah, ending at 8,950. Under the deal, earlier approved by parliament, prices were to have increased in three annual stages, starting with an average 21.67 percent rise next week.
Indonesia's leading bank, Bank Central Asia (BCA) , closed up 50 rupiah at 1,150 even though a state auditor's report showed the country's bank restructuring agency (IBRA) had not returned some 20 billion rupiah in collateral to BCA. IBRA was supposed to have returned the money under a 1999 debt deal.
"I guess players are still focusing on the fact that there will soon be a short list of bidders," another dealer at a foreign brokerage said.
BCA, 70.3 percent owned by IBRA, has said up to 30 percent of the bank would be sold to a strategic investor this month as part of the government's divestment programme. Up to six mostly international bidders are expected to be short listed for the sale.
The stake sale, originally slated for last year under an agreement with the International Monetary Fund, would be a confidence booster for the market. The IMF delayed a $400 million loan to Indonesia in December for a raft of missed economic targets and concerns over central bank law reforms.