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Technology Stocks : INDONESIA'S PT TELECOM(TLK) -- Ignore unavailable to you. Want to Upgrade?

To: npguy who wrote (279)	2/8/1998 3:11:00 PM
From: Rational	Read Replies (1) \| Respond to of 947

TB: Thanks for your post, which is consistent with what I infer from reports on Indonesians' thinking of Rp and their economy. It seems that at this stage common Indonesians within Indonesia are willing to sell Rp cheaper than the true value of Rp as per prominent market participants off-shore, particularly, in Singapore. Many are buying Rp for USD in Indonesia and selling the Rp in Singapore for a large profit; the Indonesian government yesterday banned carrying more than 5 mil Rp offshore. It seems that those who have sold Rp short are beginning to exploit the still-panicky situation among ordinary Indonesians who appear to be less confident than the major market players about the reforms. I have also read many Jakarta analysts' comments like "how could a technically bankrupt company's stock price rise 20% on a day the company is describing its debt problems?" I think these analysts have very little understanding of the situation. Many days ago, I had posted on the Asia thread that technical bankruptcy is meaningless because debtholders will simply takeover the company; unless the company is inefficient and/or unproductive when it could be liquidated. This is the main reason for why prices of well-run and productive private companies have risen despite technical bankruptcy; one has to also keep in mind that once lenders take such actions, these companies automatically become solvent as the Rp value climbs due to the changed expectation. Stock prices respond to expectations which at this juncture indicate a roll-over of all corporate and government debt and/or equity-for-debt swap. Prices also respond to liberalization, new bankruptcy codes, and many other aspects that the government has started implementing. Financial markets' correct response to these developments do not show, however, that the economic conditions will be better for Indonesian citizens anytime soon. Financial markets are upbeat because companies will be allowed to raise product prices and be out of govt control; this is bad for Indonesians who have been enjoying lower govt-controlled prices. I am still apprehensive about the political situation; but none of that points to a reversal of the economic reforms taking root in Indonesia. I think Suharto and his children will do everything to retain the family's legacy; we will see him in stronger actions after he is formally elected. They never faced open criticisms and so gotten into habits that most in power (except someone like Gandhi) would indulge in. Now, Suhartos are feeling offended about public criticisms and are moving ahead to change their images. Suharto is still liked by most Indonesians and he does not want them to think that his "croney capitalism" was at least partly responsible for the economic problems. Suharto knows that he needs the conglomerates (owned mainly by Chinese) and he privately likes them; he is doing his best to suppress agitation against the Chinese businesses. But, I am still unsure how this economic scenario will evolve. Sankar