Under the tutelage of the International Monetary Fund, the JSX has continued to open itself up to foreign investment. Foreigners are also now allowed to take controlling stakes in Indonesian media companies. Indeed, the biggest market transactions in 2000 are set to come from the Indonesian Bank Restructuring Agency, which is in charge of recapitalizing the nation's financial sector. Global investment trends are also working against Jakarta shares. Earlier this year, Morgan Stanley Capital International, or MSCI, shifted the weighting of Asian shares in its international indexes, increasing the allocation to Malaysian and Taiwanese issues due to those countries' strong economic prospects.
Analysts also say Indonesian shares are being hurt by the relative scarcity of technology stocks.
Indonesia is still in the early stages of developing its telecommunications systems and is seen as lagging behind other emerging markets in attractive Internet interests. Among the few stocks cited are state-owned telecom companies PT Telekomunikasi Indonesia and PT Indonesian Satellite Co., or Indosat. Investors say politics will also weigh heavily on those considering buying Indonesian equities. Last fall's election of President Abdurrahman Wahid as Indonesia's first democratically elected leader has been well received by the market. His initial successes in reforming the Indonesian military and political systems have also been applauded.