JCI Prone to Correction this Week

TEMPO.CO, Jakarta - Investors decision to buy low cost stocks has managed to push the index up. The Jakarta Composite Index (JCI) rose to 4,816.58 at the end of last week, showing strength compared to regional stock exchanges that tended do be corrected.

The gain, said MNC Securities analyst Reza Nugraha, was only a technical rebound. The lack of positive sentiment caused the index to move negatively following the downtrend in regional stock exchanges. "The index rate that is able to strengthen is actually hard to believe," he said

Therefore, Reza said, the index is prone to a correction at the beginning of this week. Market participants are worried about US issuers' financial performances due to the current bad weather, while investors in the domestic market will tend to wait. "Negative expectations of US issuers' financial statements in the US stock market are likely to put a pressure on the index," he explains.

The fear had caused US stock markets to be corrected last week. The Dow Jones closed 0.89 percent lower while the S&P 500 was corrected by 0.95 percent. Global investors seemed to have taken anticipative measures by selling some of their stock portfolios.

Therefore, the index is predicted to be edge up to around 4,780-4,850. Market participants are advised to buy cheap stocks with good prospects, including banking and consumer stocks such as BMRI, BBRI, KLBF, and UNVR. "Where situation in the stock market is not favorable, those two sectors are always interesting to watch," he said.

PDAT | MEGEL JEKSON